REIMAGINING THE WTO: APPLICATIONS OF THE NEW
DEAL AS A MEANS OF REMEDYING EMERGING GLOBAL
ISSUES
INTRODUCTION
With the onset of the era of globalization, the World Trade
Organization (WTO) is prominent and influential due to its unique global
position. The WTO is a world trade facilitator—a body dedicated to the
elimination of trade barriers between member states—not a world
government.1 In light of recent events, such as the lack of effective
consensus at the United Nations over how to deal with Iraq, the WTO may
be the one international body with the ability to tackle worldwide issues,
and in fact, it already does deal with global issues such as the AIDS crisis in
Africa.2
Some scholars have criticized the WTO for its rigid adherence to free
trade principles. One such critic is sociologist Charles Derber. His vision
of the WTO contemplates its acting as a world government, not a trade
body.3 He criticizes the WTO for effectively deregulating member nations’
1. One need only look to the WTO’s own Web site to see how it views its mission. The WTO
states that it “is the only international organization dealing with the global rules of trade between
nations,” and it further states that “[i]ts main function is to ensure that trade flows as smoothly,
predictably and freely as possible.” WTO, The WTO in Brief, available at http://www.wto.org/english/t
hewto_e/whatis_e/inbrief_e/inbr00_e.htm (last visited May 10, 2005); see also Final Act Embodying the
Results of the Uruguay Round of Multilateral Trade Negotiations, Apr. 15, 1994, LEGAL
INSTRUMENTS—RESULTS OF THE URUGUAY ROUND vol. 1 (1994), 33 I.L.M. 1125 (1994); Marrakesh
Agreement Establishing the World Trade Organization [hereinafter WTO Agreement], LEGAL
INSTRUMENTS—RESULTS OF THE URUGUAY ROUND vol. 31, 33 I.L.M. 1125 (1994) (establishing the
WTO as well as its instruments and side agreements); General Agreement on Tariffs and Trade 1994,
Apr. 15, 1994, WTO Agreement, Annex 1A, LEGAL INSTRUMENTS—RESULTS OF THE URUGUAY
ROUND vol. 1, 33 I.L.M. 1125, 1154 (1994) [hereinafter GATT] (incorporating the previous world trade
agreement, General Agreement on Tariffs and Trade (GATT), into the new WTO structure, and stating
the free trade principles that form the bedrock of the WTO); General Agreement on Tariffs and Trade—
Multilateral Trade Negotiations (The Uruguay Round): Agreement Establishing the Multilateral Trade
Organization [World Trade Organization], LEGAL INSTRUMENTS—RESULTS OF THE URUGUAY ROUND
vol. 1, Dec. 15, 1993, 33 I.L.M. 13 (1994) (replacing the prior-term Multilateral Trade Organization
with World Trade Organization).
2. See, e.g., Henry Chu, U.N. Has a Part in Rebuilding Iraq, Powell Says, L.A. TIMES, Apr. 4,
2003, at A16 (noting the discord created among the allies of NATO over the war in Iraq and that the
coalition would have supremacy over the rebuilding effort, not the United Nations); John Fraser, WTO
Deal Allows SA to Export Cheap Drugs, BUS. DAY (South Africa), Sept. 1, 2003, at 1 (reporting on the
historic WTO deal allowing for importation of generic drugs by African countries facing health crises);
Guy De Jonquieres, WTO Near Accord on Medicines, FIN. TIMES, Aug. 23, 2003, at 1 (outlining the
issues the WTO dealt with regarding the need to overcome patent protection rules to allow for poor
countries dealing with the AIDS epidemic to import generic drugs that are less expensive).
3. CHARLES DERBER, PEOPLE BEFORE PROFIT 145 (2002). Derber does agree that “[t]he
WTO is not a formal world government,” but he also states that the WTO “is the only global governance
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labor and environmental protections in the name of free trade.4 Derber’s
book describes this situation with the WTO as part of a “global
Constitutional Moment” which in his estimation reached a second stage in
1995.5 He believes the WTO and other major global financial institutions
represent one strain of the U.S. Constitution—the strain dedicated to
protecting property rights.6 Derber sees the United Nations as representing
a competing strain of the U.S. Constitution—the strain dedicated to
protecting and expanding individual rights embodied by the Bill of Rights.7
Derber advocates for a global New Deal to reverse the international shift
toward the principles of the U.S. Constitution favoring protection of
property over rights of people.8 He advocates for four policy agendas to
achieve
this
New
Deal:
global
regulation;
redistribution;
9
decommodification; and participation. This Note mainly addresses the first
of his agendas, global regulation, but critiques aspects of his other
proposals, as well.
Derber’s global New Deal is premised on his comparison of the current
global period with the Gilded Age, a period when corporate robber barons
led the United States into a type of uncivilized and uncontrolled
capitalism.10 During the New Deal era, Derber states that the United States
recognized that massive government intervention was required to rein in the
exploitation of the Gilded Age and to create a new capitalism which was
“respectful of workers and communities.”11 Derber then finds that in
today’s world of globalization, there exists an uncivilized and unregulated
capitalism similar to that of the Gilded Age.12 Thus, the world presently
faces a situation similar to the one faced by the United States prior to the
New Deal.13
system with real economic enforcement powers.” Id. at 119–20.
4. Id. at 149.
5. Id. at 119. Derber further notes that the first major “Constitutional Moment” in the new
globalization was the founding of the International Monetary Fund and the World Bank, known
collectively as the Bretton Woods institutions because they were founded at a U.N. conference in
Bretton Woods, New Hampshire.
6. See id. at 107 (comparing the U.N. Charter with the Bretton Woods institutions).
7. Id.
8. See id. at 148–51 (laying out Derber’s vision of a global New Deal).
9. See id. at 148–66 (advocating for regulation of the world monetary policy and corporations,
redistribution of wealth and income, decommodification to reverse the trend toward privatization and to
make natural resources a public commodity or “global commons” as Derber terms it, as well as
participation, which means a more democratic global process).
10. Id. at 148.
11. Id.
12. Id.
13. Id.
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Derber’s solution is to advocate for a global New Deal.14 While some
of his policy suggestions focus on other international institutions, this Note
concentrates on the policies aimed at the WTO. He in fact calls for the
complete abolition of the WTO, insisting that the United Nations and other
more progressive institutions replace it.15 He considers the WTO and its
brethren—international financial institutions such as the International
Monetary Fund and World Bank—“centralized ‘world governments.’”16
Derber does not suggest ending globalization, but rather harnessing
globalization to create a more democratic world system that will attack
poverty instead of allowing a “feeding frenzy for the rich.”17 He contends
that “deregulation of financial markets . . . is a dagger aimed at the heart of
democratic self-rule” forcing weaker nations to “open themselves
indiscriminately to foreign ownership, and transform themselves into agroexport economies while their people lack food.”18 To combat this problem,
Derber does not propose “global protectionism” but instead sees his vision
as being in kindred spirit with the Keynesian vision of the original Bretton
Woods ideas, such as “the need for a regulated financial order” where trade
agreements are “subordinated . . . to democratic regulation.”19 Although
Derber’s global New Deal proposal advocates WTO abolition, the WTO is
not likely to be abolished, and accordingly, this Note examines the global
New Deal proposal in the context of reform within the current WTO
system.20
Seeking inspiration from the past to deal with complex new global
issues, the concept of a New Deal for the WTO is born.21 Derber’s New
14. Id.
15. See id. at 147–48 (calling for WTO abolition and the creation of a more democratic global
government by building on United Nations agencies, as wells as new agencies and bodies).
16. Id. at 145.
17. Id. at 148.
18. Id. at 151. Derber is not the first to see unregulated international markets as a boon for
wealthy nations at the expense of underdeveloped nations. For a similar view from Swedish scholar Dr.
Gunnar Myrdal, see GUNNAR MYRDAL, THE CHALLENGE OF WORLD POVERTY 279 (1970), where he
outlined a similar finding, noting that unregulated market forces in “international trade . . . will
generally tend to breed inequality, and will do so the more strongly when substantial inequalities are
already established.”
19. DERBER, supra note 3, at 151.
20. See id. at 149 (discussing a proposal to regulate, within the context of current WTO trade
laws, albeit in the context of subordinating them to a new system).
21. Cf. Theodore R. Posner & Timothy M. Reif, Homage to a Bull Moose: Applying Lessons of
History to Meet the Challenges of Globalization, 24 FORDHAM INT’L L.J. 481, 485 (2000) (offering the
Progressive movement of the early twentieth century led by Theodore Roosevelt as an alternative
historical analogue for the WTO to follow). Posner and Reif do briefly discuss the New Deal Supreme
Court jurisprudence, and they focus on how to make the WTO achieve better balance between free trade
and promotion of positive social policy. Id. at 498–500, 503–13.
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Deal policy of regulation, the main policy that this Note examines, aims to
regulate global corporations and money. His goal is to eradicate the race to
the bottom, with the result being improved protection of the labor market
and the environment.22 Specifically, Derber wants to “subordinate all the
current WTO and GATT trade laws” to a new system “based on human
rights and sustainable development.”23 He wants the new system to enforce
global labor and environmental standards “shredded by the current
system.”24 The goal is to level the playing field between developed and
developing nations. This leveling would be accomplished by preventing
“predatory” practices by multinational corporations through the
enforcement of globally uniform standards, thus ending the race to the
bottom.25 Derber’s vision of a more level playing field between developing
and developed nations, anchored by new globally uniform labor and
environmental standards, is certainly laudable. Yet one must question the
historical accuracy of the moniker New Deal when discussing Derber’s
plan.26
Often, scholars focus on how the WTO adjudicative system compares
to the U.S. Supreme Court jurisprudence—attempting to determine whether
the WTO trade regime jurisprudence is or is not analogous to the U.S.
dormant commerce clause jurisprudence.27 However, an interesting and
relatively unexamined question deals with the accuracy of comparing the
current global situation and WTO reform with the Great Depression era and
the New Deal. While many proponents of WTO reform use analogues to
22. DERBER, supra note 3, at 149. There is discussion of the race to the bottom in Part II of
this Note.
23. Id.
24. Id. at 151–52.
25. See id. at 152–53 (detailing the policy by which proposed new institutions to replace the
WTO and current institutions would implement global labor, social, and environmental standards to set a
global uniform floor and offering incentives to raise these standards beyond the minimum level).
26. See id. at 154, 159 (detailing other portions of Derber’s policy agenda that are not
discussed in detail in this Note). These proposals deal mainly with redistributing wealth to the poor in
the global economy and decommodification, whereby Derber would reverse the privatization trend and
claim various resources as public. The historical accuracy of labeling these policies as New Deal
policies is debatable, which is demonstrated in Parts I and III of this Note. These Parts discuss the
historical New Deal and its focus on the private sector. For purposes of this Note, Derber’s goal of
regulation is the focal issue.
27. See, e.g., Posner & Reif, supra note 21, at 500–01 (discussing dormant commerce clause
development in U.S. jurisprudence and raising questions of its relevance to today’s global trade system);
Peter M. Gerhart, The Two Constitutional Visions of the World Trade Organization, 24 U. PA. J. INT’L
ECON. L. 1, 40 (2003) (comparing the WTO with the Supreme Court’s “process based” approach to
dormant commerce clause cases); David M. Driesen, What Is Free Trade?: The Real Issue Lurking
Behind the Trade and Environment Debate, 41 VA. J. INT’L L. 279, 360–63 (2001) (comparing U.S.
dormant commerce clause jurisprudence to the WTO within the context of searching for a
comprehensive definition of free trade).
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periods in U.S. history to make their point more salient to U.S. citizens, one
must examine whether these analogues are properly drawn for them to have
any true relevance to today’s political debates. To analyze the comparison
between the historic New Deal and Derber’s proposed global New Deal,
one must examine what types of remedying legislation President Franklin
Roosevelt and the New Deal-era legislators sought to enact in relation to the
trying circumstances of the time. How does the historic New Deal compare
with the types of protections advocated by WTO critics to meet the trying
circumstances of the twenty-first century?
Within this issue are multiple sub-issues. One is whether the
circumstances surrounding the enactment of the New Deal are similar to the
circumstances of today. Another is how environmental, labor, and other
social protections advocated for the WTO compare with protections that
were put in place during the New Deal. Finally, assuming that such
protections are needed for the WTO, how would they best be implemented?
While each of these sub-issues could easily comprise a separate Note, this
Note addresses the main issue: whether the New Deal is a proper analogue
for the WTO to emulate. Importantly, this Note focuses on the enacted
New Deal legislation and the way this legislation remedied effects of the
Great Depression. It will not focus on the dramatic Supreme Court rulings
that found much of the early New Deal legislation unconstitutional.
Part I of this Note discusses the circumstances surrounding the
enactment of the New Deal, and the types of legislation President Roosevelt
and Congress enacted during that era. Part II analyzes the WTO, its
formation and functions, and the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) as an example of a substantive,
positive side agreement to the WTO. Part III compares the economic and
political situation of today to that preceding the New Deal. Part III also
examines whether a robust program for the WTO, as Professor Derber
advocates, would be an appropriate response to today’s economic and
political challenges internationally, and how such a program would
compare with the protections implemented during the New Deal. Finally,
Part III shows how the protections Professor Derber advocates could
potentially be implemented within the framework of the WTO.
I. THE ORIGINAL NEW DEAL
A. The Impetus for the New Deal: The Great Depression
While Professor Derber discusses the Great Depression, which
provided the impetus for the original New Deal, one must consider whether
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his contention that the current world situation is similar or worse than the
situation during the Great Depression is accurate, or merely a convenient
comparison for his broader purposes.28 Derber argues that the recent
recession, terrorist attacks, and decline of high-tech markets provides
“fertile” ground for a New Deal.29 Derber offers anecdotal evidence to
support his findings that the world is ready for a shift towards a global New
Deal.30
A discussion of the Great Depression is imperative to provide
background information for this Note. Such information establishes a basis
not only for comparing remedies such as the New Deal and proposed WTO
changes for social protection, but also the political and economic climates
which would allow for such changes. A recent article by Professor Steven
Ramirez reviewing the New Deal noted that the Great Depression was a
“cataclysmic event [that] forever changed the federal government’s role in
the economy.”31 The circumstances of the times were desperate, and it may
be impossible to exaggerate the hopelessness of the period.
1. Living in the Great Depression
Based on economic data, Professor Ramirez found that the Great
Depression lasted from 1929 until at least 1939, if not longer.32 He notes
that unemployment rose 22% from 1929 to 1933, reaching a level slightly
above 25% in 1933 and not receding below 10% until 1941.33 Additional
indicators of the extremity of the Great Depression included one thousand
home foreclosures per day in 1933; a decline in gross domestic investment
by 80% from 1929 to 1933; labor unrest, which included violence and
deaths; and a decline in Real Gross National Product from over seven
hundred billion dollars in 1929 to under five hundred billion dollars in
1933.34 The New York Stock Exchange lost over 40% of its value, a
staggering twenty-six billion dollars, in a matter of weeks following the
28. DERBER, supra note 3, at 156. There is more on this comparison in Part III of this Note.
29. Id. at 157.
30. Id. Among Derber’s anecdotal evidence of the coming of a global New Deal is the
situation in Argentina, where he notes that the President of Argentina has criticized the international
economic model and promised to spend money on social programs instead of repaying debt. Id. Derber
argues that this paralleled the shift in thinking from the laissez-faire Hoover administration to the more
activist and socially conscious Roosevelt administration. Id.
31. Steven A. Ramirez, The Law and Macroeconomics of the New Deal at 70, 62 MD. L. REV.
515, 517 (2003).
32. Id. at 524.
33. Id.
34. Id. at 524–26.
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crash of October 1929.35 At least four million Americans were unemployed
by the spring of 1930, and breadlines were appearing in larger cities.36
These breadlines were full of “embarrassed men, shuffling patiently
forward for a chance at a piece of bread and a cup of coffee.”37 The
situation was desperate; in New York City, “the number of families on
relief . . . increased 200 per cent since the crash . . . [and] municipal lodging
houses were now crowded,” many with individuals who were there for the
first time.38 Homeless men slept on a municipal barge tied to a dock at
night in New York, while in Detroit, thousands of unemployed men sat in
parks “muttering to themselves” all day long.39
Conditions only
deteriorated, and in “the second winter of the depression . . . unemployment
began to settle into a way of life.”40 Many people dug through refuse to
find food.41 By the spring of 1931, unemployment doubled to eight million
people; some areas were extremely hard hit, such as Pennsylvania with
almost one quarter of the workforce out of work.42
The Great Depression caused a situation in the United States where
many were concerned about revolution as a response to the lack of effective
government action to stop the rapid decline of the economy. The American
Federation of Labor voiced this opinion when it spoke of impending
violence and revolution if the unrest caused by the economy was not
remedied.43 Wealthier Americans feared a siege by revolutionaries, and the
leader of the National Farmers Union predicted doom for capitalism.44
Government seemed helpless to counteract the problems posed by the Great
Depression.45
35. ARTHUR M. SCHLESINGER, JR., THE AGE OF ROOSEVELT: THE CRISIS OF THE OLD ORDER,
1919–1933, at 159 (1957).
36. Id. at 167.
37. Id.
38. Id.
39. Id. (quoting Bruce Bliven, On the Bowery, NEW REPUBLIC, Mar. 19, 1930).
40. Id. at 171. This way of life included living “in unheated tenements, in the flophouses
smelling of sweat and Lysol, in the parks, in empty freight cars, along the windy waterfronts” and in
shacks built wherever there was land that was not occupied. Id. Schlesinger describes the shanties and
tarpaper towns that sprung up, some of which were “squalid beyond belief, with the smell of decay and
surrender.” Id. These new communities were called Hoovervilles after President Herbert Hoover, a
symbol for many of the inability or unwillingness of the government to respond to the crisis. Id. Only
“the fortunate” found their way to Hoovervilles, while others crowded “in doorways, in empty packing
cases, [or] in boxcars” at night. Id.
41. Id. Schlesinger quotes one observer who asked, “Have you seen the uncontrollable
trembling of parents who have gone half starved for weeks so that the children may have food?” Id.
42. Id.
43. ROBERT S. MCELVAINE, THE GREAT DEPRESSION: AMERICA 1929–1941, at 90–91 (1993).
44. Id. at 90–92.
45. See SCHLESINGER, supra note 35, at 172 (discussing the lack of fiscal sources and credit for
localities, as well as the decline in state tax revenue and the overall declining standard of relief care by
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In 1932, there was reason for concern. Unemployment had reached a
new total of approximately thirteen million people, and “[m]any lived in the
primitive conditions of a preindustrial society stricken by famine.”46
Millions roamed “the country in a fruitless quest for work,” and the
desperation extended to all ends of the country, from Tennessee to New
Jersey, from Pennsylvania to Illinois, from California to New York.47 One
writer said of the tough winter of 1932 that “we could smell the depression
in the air.”48 A Communist-inspired march on the Ford factory in
Dearborn, Michigan ended in a bloody clash with police leaving four
protestors dead.49 That same year, a group of twenty thousand World War I
veterans in need of money gathered in Washington, D.C. to ask for early
payment of a bonus that the government promised to give them in 1945.
This protest also ended in bloodshed when President Herbert Hoover set the
U.S. Army upon the group of veterans.50 Even the normally conservative
farmer was driven to radicalism by the depths of the Great Depression.51 At
the end of Hoover’s time in office, “more than fifteen million workers had
lost their jobs,” and national income had been cut in half.52
the government). The need for federal aid was pronounced in the South, where states like Florida, South
Carolina, Georgia, and Alabama had weak decentralized executive branches that were ill-equipped to
deal with crisis situations. DAVID R. COLBURN & LANCE DEHAVEN-SMITH, GOVERNMENT IN THE
SUNSHINE STATE 7 (1999). These states were heavily reliant on the New Deal to stay afloat. For more
on the Southern states’ executive-branch structures and Florida’s experience during the Great
Depression, see id. at 7, 28–36, 88, 147.
46. WILLIAM E. LEUCHTENBURG, FRANKLIN D. ROOSEVELT AND THE NEW DEAL 1932–1940,
at 1 (1965).
47. Id. at 2–3.
48. Id. at 18 (quoting Harold Clurman). The Great Depression was palpable to one
correspondent, who said that “I see on streets filthy, ragged, desperate-looking men, such as I have never
seen before.” Id. at 19 (quoting Henry Morrow Hyde).
49. MCELVAINE, supra note 43, at 92–93.
50. Ramirez, supra note 31, at 525; see also MCELVAINE, supra note 43, at 92–94 (noting that
General Douglas MacArthur actually acted on his own accord and disobeyed orders from Hoover in
evicting the veterans, although Hoover was blamed for this action).
51. See SCHLESINGER, supra note 35, at 176 (quoting the president of the Wisconsin Farmers’
Union testifying to the Senate Agriculture Committee in 1932 as saying, “I am as conservative as any
man could be, but any economic system that has it in its power to set me and my wife in the streets, at
my age—what else could I see but red” in referring to the inclination of farmers to become communist
due to the extreme financial disaster they faced); see also LEUCHTENBURG, supra note 46, at 138–39
(discussing the desperation of the “Arkies” and “Okies,” farmers from Arkansas and Oklahoma whose
farms literally were blown away in dust storms and who headed west with their families to seek work,
only “to be drowned in a sea of cheap labor” and exploited). As Leuchtenburg points out, the
symbolization of the farm families’ odyssey from Oklahoma to California is chronicled in JOHN
STEINBECK, THE GRAPES OF WRATH (1939).
52. LEUCHTENBURG, supra note 46, at 18–19. Beyond the mere fact of unemployment was the
hopelessness of those who wanted to work and could not find a job. One worker said that “the
anniversary of your layoff . . . makes you feel more hopeless,” and Leuchtenburg observed that
confidence had given way to a feeling of impotence among the unemployed, even leading some to
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2. The Causes of the Great Depression
At the outset, it is important to remember that the Great Depression
was both an American experience and an international one—although U.S.
economic failures may have been the spark which ignited the worldwide
Depression.53 That being said, the Great Depression must be evaluated
within the confines of the U.S. experience, as New Dealers tailored the
relevant New Deal protections to benefit the United States. The causes of
the Great Depression were apparently many, and there is no grand
consensus among scholars, although there are many plausible theories.
Some scholars theorize that the main cause was poor income distribution
through the capitalist system, effectively causing a collision between
production and consumption limits.54 Not wholly inconsistent with that
approach, Professor Ramirez notes that “the Depression had its roots in the
speculative stock market boom of the 1920s.”55
One persuasive theory is simply that consumer demand fell in sharp
bursts.56 Christina Romer posits that a multitude of factors caused
monetary problems, including the adherence to the gold standard; the
raising of interest rates by the Federal Reserve at an inopportune time in an
attempt to stem the stock market speculation prior to the Great Depression;
a decline in consumption that caused decline in the stock market; and a
series of banking crises which perpetuated the Great Depression by causing
pessimism amongst consumers and businesspersons.57
Perhaps most relevant is the conclusion by Professor Ramirez
regarding the causes of the Great Depression. He notes that there exists
some consensus by economists that “the central failure was the volume of
investment—and it is clear that there were few tools available to
policymakers to counter this essential fact.”58 Thus, it becomes clear that
withdraw from society in the equivalent of social excommunication. Id. at 118–19.
53. See MCELVAINE, supra note 43, at 49 (finding that American collapses set off the
worldwide Depression because the United States shunned its responsibilities as a leader of the world
economy).
54. Id.
55. Ramirez, supra note 31, at 526.
56. Christina D. Romer, The Nation in Depression, 7 J. ECON. PERSP. 19, 25 (1993).
57. Id. at 25–32.
58. See Ramirez, supra note 31, at 527 (finding that central to the cause of the Great
Depression were failures by the Federal Reserve at key junctures in the crisis, because their motivation
may have been more politically oriented, rather than based on sound economics). Ramirez goes on to
note the reasons why there were few options for politicians of the day to respond. Discussing “[t]he
dogma of the day,” he notes that it required markets to be left alone; for wages to fall to create economic
equilibrium; that budgets be balanced which “stripped the government of fiscal policy”; that the gold
standard be adhered to “which stripped the government of monetary policy”; and found that President
Herbert Hoover was not so much a rigid adherent to the conservative philosophy as much as a President
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although the causes contributing to the Great Depression were many, the
tools which U.S. politicians had to combat it were few.59 Here, the impetus
for the New Deal becomes clear, as it was a response to a nation in need of
new leadership to quell unrest and in need of a broader ideology capable of
innovation in government to combat economic catastrophe. The Great
Depression represented, in essence, a unique opportunity to save both
democracy and capitalism—but also to enact far-reaching social reforms.
B. The New Deal Protections
Into this seemingly intractable situation came President Franklin D.
Roosevelt. His election over incumbent President Herbert Hoover in 1932
signaled the victory of “FDR’s vision of an active government, responsible
for managing and regulating the economy.”60 While various radical forces
waited in the wings to push their respective ideology on a fearful nation,
Roosevelt set out clearly to preserve capitalism and democracy by working
with Congress to enact social and economic reforms.61 Roosevelt was
critical of supposedly free markets, and his skepticism centered on the
concern of “whether free markets alone could assure adequate
macroeconomic performance.”62
According to historians, there are at least two, and arguably three,
separate New Deal periods within the Roosevelt administration beginning
in 1933 and ending in 1945.63 Each New Deal had its own distinctive
unwilling to experiment and deviate from the laissez-faire economic doctrines prevailing at the time. Id.
at 528–30.
59. See generally MCELVAINE, supra note 43, at 73–94 (noting how the Great Depression ran
its course, and the actions and inactions by President Hoover—who although faulted by many historians
for his failure to react adequately to the Depression, due in part to his supposed adherence to the concept
of natural market corrections, may deserve less of the blame for the Depression, despite his decisionmaking being anything but fortuitous).
60. Ramirez, supra note 31, at 530; see also RICHARD POLENBERG, THE ERA OF FRANKLIN D.
ROOSEVELT, 1933–1945: A BRIEF HISTORY WITH DOCUMENTS 8 (2000) (noting that Roosevelt’s victory
over Hoover was by approximately seven million votes and included Democratic gains in the House and
Senate, which, combined with the crisis atmosphere, gave Roosevelt a degree of cooperation that he
otherwise might not have had).
61. Thomas Ferguson, From Normalcy to New Deal: Industrial Structure, Party Competition,
and American Public Policy in the Great Depression, 38 INT’L ORG. 41, 42 (1984).
62. Ramirez, supra note 31, at 532.
63. See generally Eric R. Claeys, The Living Commerce Clause: Federalism in Progressive
Political Theory and the Commerce Clause After Lopez and Morrison, 11 WM. & MARY BILL RTS. J.
403, 426–27 (noting that the First New Deal commenced in 1933 and the Second New Deal commenced
in 1935); John W. Jeffries, The “New” New Deal: FDR and American Liberalism, 1937–1945, 105 POL.
SCI. Q. 397, 397 (1990) (discussing that a “Third New Deal” existed during the years of 1937–1945,
albeit somewhat under the radar due to the crisis of World War II).
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programs. These programs were designed to combat the Great Depression
and extend social protections.
1. The First New Deal
The First New Deal period, beginning in 1933 after Roosevelt’s
election, included the National Industrial Recovery Act (NIRA), which
created the National Recovery Administration (NRA).64 This major piece
of legislation faltered. The NIRA’s goal was to assist businesses in keeping
wages and prices high—but it was written in such a way that business
interests had control over drafting codes regulating the market prices—and
it failed because businesses chose to keep production low and prices high.65
In addition, the legislation failed to create a genuinely enforceable right to
organize for laborers.66
Professor Ramirez notes that in contrast to the NIRA, “[t]he real legacy
of the New Deal’s regulatory initiatives lies in innovations designed not to
quell but to facilitate market action.”67 With this in mind, the first New
Deal featured much legislation that did bear on the legacy of the New Deal
as a whole. For example, the Agricultural Adjustment Act (AAA)68 served
as the New Deal’s farm policy and attempted, according to Roosevelt, “to
balance agricultural production and consumption so as to avoid surpluses
and ensure that farmers got a fair price.”69 Despite some drawbacks, the
gross farm income was up 50% by 1936, and farm debt dropped by one
billion dollars.70 It is important to note that the AAA was voluntary, not
coercive.71
64. National Industrial Recovery Act, Pub. L. No. 73-67, 48 Stat. 195 (1933) (repealed 1935);
POLENBERG, supra note 60, at 9.
65. POLENBERG, supra note 60, at 9–10; see also MCELVAINE, supra note 43, at 161–62
(terming the NRA “a colossal failure” prior to the NIRA being struck down by the Supreme Court as an
“unconstitutional delegation of legislative power” (quoting A.L.A. Schecter Poultry Corp. v. United
States, 295 U.S. 495, 542 (1935)).
66. POLENBERG, supra note 60, at 10; see also Ramirez, supra note 31, at 535 (noting that
despite its grand notions of regulating free markets for production and pricing, this legislation was not
part of the New Deal’s legacy).
67. Ramirez, supra note 31, at 535.
68. Agricultural Adjustment Act, Pub. L. No. 73-10, 48 Stat. 31 (1933) (codified as amended at
7 U.S.C. § 601 (2000)).
69. POLENBERG, supra note 60, at 11; see also MCELVAINE, supra note 43, at 148 (discussing
the Emergency Farm Mortgage Act tied to the AAA, which provided farmers with lower mortgage
rates).
70. POLENBERG, supra note 60, at 12. One of these drawbacks was the reduced need for farm
labor due to less workable acreage because of federal payments to farmers in exchange for limitations on
production to avoid surpluses that devalued crops. Id.
71. MCELVAINE, supra note 43, at 149. The AAA was declared unconstitutional in United
States v. Butler, 297 U.S. 1 (1936). Id. at 150–51.
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The First New Deal also dealt with home ownership in the Home
Owners’ Loan Act of 193372 and the National Housing Act.73 The National
Housing Act created the Federal Housing Administration, which, along
with the Home Owners’ Loan Act, helped increase home ownership
through insurance of home loans and lower interest rates to home
purchasers.74
Other early New Deal actions included the creation of the Federal
Emergency Relief Administration, which made grants to the states for
relief, and the Public Works Administration, which was intended to expand
public works and provide employment; both programs were enacted with
the goal of getting the economy moving.75 Another creation, the Civil
Works Administration (CWA) provided quick employment relief despite
criticism by conservatives for being wasteful.76 The CWA became a victim
of its own success, and due to concern that people were beginning to rely
too much on the government and regarded the temporary program as their
entitlement, the program ceased over a period of time.77 Yet another
creation was the Works Progress Administration, which conducted
construction and improvement of public facilities as a means of providing
employment; this helped limit the number of people who were “on the
dole” of federal welfare relief.78 Professor Ramirez notes that the legacy of
the New Deal with respect to public works was “a mixed bag” and found
that while many of these works proved useful, they did not create the type
of major stimulation to the economy that might have been expected.79
Quite interesting for purposes of this Note is the conservationist aspect
of the New Deal. Although the environmental movement had not started in
earnest, Roosevelt considered himself a conservationist and thus pushed for
some measures that mixed environmental conservation with economic
initiative and social protection.80 The New Deal featured two major efforts
that had environmental aspects: the Tennessee Valley Authority (TVA) and
72. Home Owners’ Loan Act of 1933, Pub. L. No. 73-43, 48 Stat. 128 (codified as amended at
12 U.S.C. § 1461 (2000)).
73. National Housing Act, Pub. L. No. 73-479, 48 Stat. 1246 (1934) (codified as amended at 12
U.S.C. § 1701 (2000)).
74. Ramirez, supra note 31, at 560–61.
75. MCELVAINE, supra note 43, at 151–52.
76. See id. at 153–54 (noting that the CWA was denounced “for being rife with ‘petty graft’
and ‘politics’”).
77. Id. at 154.
78. Id. at 265.
79. Ramirez, supra note 31, at 554–55.
80. See POLENBERG, supra note 60, at 13 (describing the cause of conservation as being close
to Roosevelt’s heart); LEUCHTENBURG, supra note 46, at 173 (touting the New Deal’s focus on soil
conservation, meant to combat the effects of dust storms and preserve land for future generations).
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the Civilian Conservation Corps (CCC). The TVA focused on a forty
thousand square mile region, and “provided cheap electric power” and
simultaneously worked to “prevent soil erosion and control floods.”81 The
TVA dealt with the poverty stricken area of the South and provided for
people who had no electricity, running water, and whose land was
increasingly untenable.82 The TVA worked to reforest, develop marginal
lands, and improve the Tennessee River for navigation and the economic
well-being of the people in the area.83 The CCC “combined the functions of
relief and forestry.”84 CCC “volunteers fought forest fires and reseeded
grazing lands; they constructed roads, bridges, water-storage basins, and
camping facilities; they built wildlife refuges, fish-rearing ponds, and
animal shelters.”85
The financial side of the First New Deal featured the Banking Act of
1933,86 the Securities Exchange Act of 1934 creating the Securities
Exchange Commission (SEC),87 and the Securities Act of 1933.88 The
Banking Act was notable for its creation of the Federal Deposit Insurance
Corporation (FDIC), which made “bank deposits as safe as government
bonds in order to stem bank runs and protect communities from the
economic shock of bank failures.”89 The Banking Act was intended to
relieve banks from needing to maintain reserves in anticipation of bank
runs, freeing banks to fund economic growth.90 The Banking Act also
consolidated control of monetary policy in the Federal Reserve Board and
insulated the Federal Reserve from political pressures, partly by giving long
terms to its members.91 The Securities Act of 1933 and Securities
Exchange Act of 1934 can be characterized, according to Professor
Ramirez, as being about “disclosure” by corporations, and their goal was to
81. POLENBERG, supra note 60, at 13.
82. Ramirez, supra note 31, at 552.
83. Id.
84. POLENBERG, supra note 60, at 13.
85. Id.
86. Banking Act of 1933, Pub. L. No. 73-66, 48 Stat. 162 (codified as amended in scattered
sections of 12 U.S.C.).
87. Securities Exchange Act of 1934, Pub. L. No. 73-291, 48 Stat. 881 (codified as amended at
15 U.S.C. § 78a (2000)). See generally MCELVAINE, supra note 43, at 165 (explaining that business
complaints led to the weakening of the Securities Exchange Act, which resulted in an increase in
decision-making power of the SEC).
88. Securities Act of 1933, Pub. L. No. 73-22, 48 Stat. 74 (codified as amended at 15 U.S.C. §
77a (2000)); see also Ramirez, supra note 31, at 535–40 (outlining the three key New Deal financial
regulatory acts).
89. Ramirez, supra note 31, at 543.
90. Id. at 544.
91. See id. at 540 (finding that the overwhelming independence of the Federal Reserve Board
created by the New Deal was a major success of the period).
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revive investor confidence in the newly transparent market.92 Roosevelt
further sought to reach out to business interests by appointing Joseph
Kennedy as chairman of the new SEC, someone who they could trust as one
of their own.93
2. The Second New Deal
The Second New Deal period featured dramatic legislation on finance
and labor-related issues. In 1935, Roosevelt signed the Social Security
Act94 and the National Labor Relations Act (NLRA) (also known as the
Wagner Act).95 The Social Security Act “provided unemployment
insurance, pensions for retired workers, aid to dependent children, and other
social insurance programs.”96 Indeed, this legislation signaled a new
governmental social responsibility for the “care of the aged, unemployed,
handicapped, and impoverished.”97 The Act had the effect of socializing
“the costs of unemployment and old age and removed those burdens from
the shoulders of business.”98 This shows that under the historic New Deal,
the private sector was not forced to relieve the public’s burden through
regulation—here it was just the opposite, the public was relieving the
private sector’s burden.
The NLRA was a landmark law. It provided a legally enforceable right
for workers to form unions by majority vote; protected the right to strike;
outlawed company-run unions; “set up the National Labor Relations Board
(NLRB) to manage representation elections”; and outlawed certain
“methods by which employers might interfere with workers’ rights to
organize.”99 The goals of the legislation were to diffuse labor unrest and to
stimulate the economy by creating a consumer base.100 It succeeded in
remedying the problems inherent in the NIRA labor provisions, namely by
92. Id. at 535.
93. See MCELVAINE, supra note 43, at 165 (noting that Roosevelt thought Kennedy would be
acceptable to business because he was a businessperson with ties to the business community).
94. Social Security Act, Pub. L. No. 74-271, 49 Stat. 620 (1935) (codified as amended in
scattered sections of 42 U.S.C.).
95. National Labor Relations Act, Pub. L. No. 74-198, 49 Stat. 449 (1935) (codified as
amended at 29 U.S.C. § 141 (2000)).
96. Ramirez, supra note 31, at 547.
97. MCELVAINE, supra note 43, at 257.
98. Ramirez, supra note 31, at 548.
99. Theda Skocpol et al., Explaining New Deal Labor Policy, 84 AM. POL. SCI. REV. 1297,
1297 (1990).
100. See Ramirez, supra note 31, at 549–51 (citing legislation sponsor Robert Wagner who
explained, according to Ramirez, “that the NLRA was designed to create a vibrant middle class, with
higher wages, as a means of stimulating economic growth”).
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outlawing company-formed unions. The NLRA was a success in quelling
unrest and in raising worker wages.101 Although social protection of
workers was a consideration, the interest promoted was also the interest of
creating a consumer class to stimulate the economy.
3. A Third New Deal?
In addition to all of this activity, the Third New Deal, lasting from
1937 until 1945, added new economic initiatives and set forth a vision of
economic and social protections for the future. Mainly, however, this
period was “to improve those programs already in place, not to devise new
ones,” and it is obvious that the onset of World War II sapped much of the
administration’s attention to domestic issues.102 Still, this period provided
many interesting New Deal proposals.
One major initiative achieved during the Third New Deal period was
the passage of the Fair Labor Standards Act (FLSA) of 1938.103 The Act
established a nationwide minimum wage rate as well as a maximum
standard for hours worked.104 It also prohibited the employment of children
younger than sixteen years of age.105 The FLSA enactment came with the
expectation that it would provide for increased unionization by reducing
businesses’ incentive to move across state lines in search of more lax labor
standards.106
Other aspects of the Third New Deal involved visions and theories
more so than the actual passage of laws. Roosevelt’s vision in 1944 of
future reforms included a second bill of rights dealing with economic and
social issues such as health, security, housing, clothing, shelter, opportunity
to advance, education, and a right to work.107 The Third New Deal did not
come to pass because, aside from Roosevelt’s death in 1945, the economy
had recovered during the war, and political interests were no longer inclined
toward further reform. The Third New Deal, like its predecessors, featured
prominent plans to stimulate the economy through the private sector and
free enterprise.108 The Third New Deal also featured plans to encourage
101. Id. at 551.
102. See MCELVAINE, supra note 43, at 307–08 (explaining how President Roosevelt was
grappling with “military preparedness” in 1939 and 1940).
103. See LANDON R.Y. STORRS, CIVILIZING CAPITALISM 177 (2000) (detailing the history of the
drive to pass the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 (2000)).
104. STORRS, supra note 103, at 177.
105. Id.
106. Id. at 178.
107. Jeffries, supra note 63, at 398.
108. Id. at 412–14, 416–18.
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private spending through continuous “pump priming,” which was
government spending intended to prime the private sector to spend in
response.109 The overriding goal was to achieve private sector growth to
alleviate the pains of the Great Depression.
4. The New Deal Actually Promoted the Principles of Free Trade
After this thorough—but by no means exhaustive—review of New
Deal-era protections and ideas, it becomes clear that while the New Deal
expanded social protections, it did so with a consistent eye toward
encouraging the private sector to function on its own. The NLRA was
intended to create a consumer class.110 The Social Security Act intended to
relieve businesses of the burden of providing care for aging employees and
others in need.111 The various public works agencies attempted to
encourage employment and expenditure in order to stimulate the
economy.112 The AAA was an attempt to eliminate surpluses so farmers
would earn better returns.113 The various financial and housing-related acts
were intended to provide for stimulation of investment by individuals.114 It
appears that the New Deal not only recognized the defects of the free
market, as contended by Professor Derber, but also recognized the primacy
of the private sector and the markets as necessary for the recovery from the
Great Depression. It follows that, in fact, the New Deal promoted free trade
principles.115
II. THE WTO AND THE CIRCUMSTANCES OF TODAY
A. The Current Political, Economic, and Social Climate
Examining how the current international climate is similar to, or
different from, the situation during the Great Depression is central to
determining whether the lessons of the New Deal have any relevance for the
WTO. To begin, there is a massive amount of criticism and concern over
109. Id. at 401–02.
110. See Ramirez, supra note 31, at 549 (citing sponsor Robert Wagner’s explanation of the
bill).
111. Id. at 548.
112. Id. at 554–55.
113. POLENBERG, supra note 60, at 11.
114. Ramirez, supra note 31, at 560–61.
115. See Ferguson, supra note 61, at 43–45 (citing the New Deal’s attempts to break up public
utilities and enact treaties to reduce tariffs).
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how free trade worsens the environment worldwide and the WTO’s failure
to address this in its free-trade-oriented system.116 The criticism does not
end with the environment, as labor issues constitute another major gap
perceived by critics in the WTO structure.117 A fair question is whether the
issues facing the international community in matters of labor and the
environment are truly at crisis levels. The answer, at least in some minds, is
yes.118
Perhaps the biggest issue with respect to environmental and labor
issues in the international context is the so-called race to the bottom
problem. This occurs when there is unregulated trade, and corporations
have the incentive to exploit developing countries that have more relaxed
environmental laws and substandard labor regulations in order to make a
larger profit. This causes other countries to entice business investment
from multinational corporations through a lax regulatory environment—
thus creating a race to see which countries can get to the bottom,
figuratively speaking, of the regulatory pile by having the weakest
standards.119 The race to the bottom is harmful for developed countries
because they lose jobs to developing nations where more lax labor
standards attract business.120 Yet it is a problem for developing nations as
116. See, e.g., Gregory C. Shaffer, The World Trade Organization Under Challenge:
Democracy and the Law and Politics of the WTO’s Treatment of Trade and Environment Matters, 25
HARV. ENVTL. L. REV. 1, 1 (2001) (noting criticism of the WTO on environmental issues and the
protests of the WTO by mainstream environmental groups).
117. See generally Andrew T. Guzman, Trade, Labor, Legitimacy, 91 CAL. L. REV. 885, 885
(2003) (discussing the lack of any working group within the WTO to address labor issues and noting
that the WTO maintains that the International Labor Organization (ILO) is the proper body to address
these issues).
118. See, e.g., AL GORE, EARTH IN THE BALANCE 295 (1992) (arguing that the global
environmental crisis is so great that it requires a global plan similar to the Marshall Plan, which saved
Europe after World War II); Jeff Zeleny, Rivals Joust for Union Seal of Approval to Battle Bush, CHI.
TRIB., Aug. 6, 2003, at C1 (featuring the argument of Senator John Kerry, the 2004 Democratic
Presidential nominee, that environmental and labor provisions must be included in trade agreements to
prevent exploitation and save jobs in the United States); see also infra note 192 and accompanying text
(discussing some of the extremely high unemployment rates in various developing nations and regions).
119. See Larry A. DiMatteo et al., The Doha Declaration and Beyond: Giving a Voice to NonTrade Concerns Within the WTO Trade Regime, 36 VAND. J. TRANSNAT’L L. 95, 107 nn.61–62 (2003)
(discussing the race to the bottom within the context of offering principles and proposals that would
reverse the race to the bottom and create a race to the top). Bill Burton, spokesman for the 2004
Democratic Presidential nominee John Kerry, sums up the argument of many American fair trade
advocates by stating that “[i]f you raise environmental and labor standards for everyone across the world
so we are on a level playing field, then it helps all industries, particularly agriculture.” Scott Gold,
Louisiana’s Deep-Rooted Trade Clash, L.A. TIMES, Apr. 12, 2004, at A12. According to Burton,
“When we are on a level playing field, nobody can compete with the American worker.” Id. Burton
was speaking about the Central American Free Trade Agreement (CAFTA), which Kerry opposed as it
stood, and which President Bush supported. Id.
120. See George F. Will, Editorial, The Economics of Progress, WASH. POST, Feb. 20, 2004, at
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well, where labor forces work at substandard pay rates compared to the
rates paid for those same jobs lost in the developed nations.121 The race to
the bottom encourages multinational corporations to exploit the
environment and worldwide natural resources by moving their operations to
developing nations with weaker environmental regulations—this ensures
that developed nations either have to weaken their environmental standards
to remain competitive for business or risk halting economic growth.122
A25 (defending N. Gregory Mankiw, President Bush’s chairman of the Council of Economic Advisors,
who commented that the loss of American jobs due to outsourcing by American firms is actually
beneficial to the economy). The loss of jobs in the United States as a result of globalization and trade
agreements was a political issue in the recent presidential election, won by President Bush. Many of the
Democrats who ran for President were vocal in their criticism of corporations moving jobs to foreign
countries as a result of cheaper available labor. Mankiw’s comments only added fuel to the political
fire. While he may be guilty only of adhering to the principles of comparative advantage advanced by
David Ricardo (Ricardo’s theory of comparative advantage is discussed in subpart B of this Part), he
was roundly panned for his expression of belief in unregulated free trade principles. Criticism came
strongly from both political parties. Dr. Gunnar Myrdal saw at the beginning of the 1970s that
developing nations would be able to compete with developed nations in low-wage industries and
eventually developed nations would either lose some of those industries or protect them with tariffs.
MYRDAL, supra note 18, at 299. His analysis seemed prophetic in 2004, as this became a hotly debated
political issue in developed nations such as the United States. Most free trade advocates, such as
Mankiw, welcome the shifting of low-wage industries to developing nations as necessary adherence to
the Ricardo theory. However, Myrdal understood that for developed nations to avoid this issue, and
avoid protectionism of their low-wage industries, they would have to redirect their planning and
resources toward higher-grade goods. Id. This would require periods of adjustment and retraining for
the work force, a concept getting some play politically today, but one that has not been fully
implemented. For more on Myrdal’s analysis of this issue, see MYRDAL supra note 18, at 293–301. For
more on the current political issue and a discussion of President Bush’s plan to federally fund some
community-college job-retraining programs for workers dislocated in certain industries hit hard by
globalization, see Leigh Strope, Jobless Rate Holds at 5.6%; Fewer New Jobs Than Expected in June,
But Payrolls Still Rise, CHARLOTTE OBSERVER, July 3, 2004, at 1D. For coverage of the political forces
that led to President Bush’s reelection, see Wayne Slater, Religious Conservatives Expect Bush to
Deliver: Ohio’s ‘Values Voters’ Want Gay Marriage, Abortion Issues up Front, DALLAS MORNING
NEWS, Jan. 29, 2005, at 1A.
121. See, e.g., Aravind Adiga & Jyoti Thottam, The New Idea Labs as More Firms Send
Research to India and China, Could the U.S. Fall Behind?, TIME, Jan. 31, 2005, at A6 (discussing the
outsourcing of research and development to India and China, possibly marking a new phase in
outsourcing where higher-end industry, heretofore thought out of reach of developing nations, is being
outsourced to save development costs); Michael Elliott, The Davos Man, TIME, Jan. 31, 2005, at A10
(finding that the old argument against globalization—that it only benefited richer nations—is perhaps
being replaced by a new argument that richer nations are losing out to poorer nations in globalization
due to outsourcing); Jyoti Thottam, Where the Good Jobs Are Going, TIME, Aug. 4, 2003, at 36, 36
(noting how U.S. firms are taking advantage of lower labor costs in India to move jobs overseas, causing
loss of jobs in the United States, and the payment of much lower wages for those same jobs to Indian
laborers).
122. See Andrew L. Strauss, From GATTzilla to the Green Giant: Winning the Environmental
Battle for the Soul of the World Trade Organization, 19 U. PA. J. INT’L ECON. L. 769, 791 (1998)
(describing the race to the bottom concept in relation to the environment); see also John O. McGinnis &
Mark L. Movsesian, The World Trade Constitution, 114 HARV. L. REV. 511, 558–59 (2000) (making the
argument for expansion of the WTO and arguing the race to the bottom is not an issue for the WTO to
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It is important to emphasize that Professor Derber does not see the lack
of labor and environmental standards in the WTO as the only issue creating
rifts between developed and developing nations. He sees “deteriorating
global economic conditions and mass antiglobalization protests” as
resulting from the global policies that have locked “the poor into chronic
emergencies” concerning health and poverty.123 Derber sees the lack of
democracy and human rights standards in the WTO and other Bretton
Woods institutions as fundamental issues in need of reform.124
Further arousing the international situation today is the war and its
aftermath in Iraq, which has split the United Nations.125 Financial markets
have been unsteadied not only by war-related issues, but also by corporate
governance scandals.126 With the aforementioned circumstances shaping
the global economic, political, and social climate, advocates of reform seek
to apply New Deal principles to the WTO to remedy some of these ills.127
One might wonder whether the current global climate is in any way akin to
the circumstances in the United States during the Great Depression. One
might ponder the relevance of the New Deal principles when applied to the
WTO. Before examining whether a New Deal for the WTO is a properly
drawn historical analogue, it is necessary to review what the WTO is and
how it functions.
regulate).
123. DERBER, supra note 3, at 156. Former President Clinton has written that while free trade
worked well in countries that were “well-governed,” he is dissatisfied that many in poor countries were
left out. BILL CLINTON, MY LIFE 893 (2004). He notes that late in his presidency, half the world lived
on under two dollars per day, that a billion people survived on less than a dollar a day, and that over one
billion people were hungry every night. Id. In addition, he cites the dismal situation in developing
countries where one quarter of the people had no clean water, over one hundred million children did not
go to school, and ten million children died every year from preventable diseases. Id. Clinton seems to
agree with Derber on the unregulated nature of the global trade situation, stating that “multinational
corporations and their political supporters had largely been content to create a global economy that
served their needs, believing that the growth resulting from trade would create wealth and jobs
everywhere,” although this growth clearly has not created the jobs and wealth in developing countries
that was intended. Id. Clinton also seems to agree with Derber on the basic premise of a global New
Deal, with Clinton advocating for “giving people hope through economic growth and social justice” as
this is “essential” in persuading people “to walk away from the modern horrors of terrorism and
weapons of mass destruction and the old conflicts rooted in racial, religious, and tribal hatreds.” Id. at
894.
124. See DERBER, supra note 3, at 148 (discussing the need for a democratic global
government).
125. Chu, supra note 2, at A16.
126. See, e.g., John Plender, Capitalism Under Scrutiny, FIN. TIMES, Sept. 1, 2003, at 2
(comparing corporate governance scandals of today to those during the Great Depression, and noting
that they have occurred internationally).
127. See DERBER, supra note 3, at 144–69 (detailing Derber’s vision of a global New Deal,
including his plans to reform and possibly abolish the WTO).
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B. Brief History of the WTO
The WTO operates on the basis of the Ricardo theory of comparative
advantage which, named for its original proponent David Ricardo, posits
that “if trade barriers between nations are removed, each nation will come
to produce what it can produce most advantageously, and the greatest sum
total of world production will occur.”128 Following this theory and heeding
the lessons of the past (such as avoiding high tariffs which may have
exacerbated the Great Depression), the General Agreement on Tariff and
Trade (GATT) came into being after World War II.129 Originally intended
as one treaty in what was to be an International Trade Organization (ITO)
(which was intended to be the third of the aforementioned Bretton Woods
institutions), GATT was the only provision of this charter ever put into
action, as the ITO failed to materialize.130 GATT thus assumed the role the
ITO would have played, despite its being far from a comprehensive trade
regime.131 GATT functioned through a 1947 treaty, which gave it force
despite the failure of the ITO.132 GATT grew from twenty-seven signatory
countries in 1960 to over 100 when the 1994 agreement bringing the WTO
into existence entered into force.133 Eventually, GATT would administer
some 80% of world trade.134
After years of the various member nations—known as contracting
parties—using GATT to promote trade negotiations and lower tariffs, the
international community developed the WTO in 1994 to administer GATT
and various other treaties.135 One major distinction between the WTO and
almost any other international body with a similar number of member states
is that the WTO has teeth in its enforcement mechanism.136 Before
128. Strauss, supra note 122, at 792–93. “Under the classic theory, a country gains a
comparative advantage in producing certain goods if it has access to factors of production which allow
such goods to be produced at a relatively lower cost than in other countries.” Id. at 793.
129. General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A-11, T.I.A.S. 1700, 55
U.N.T.S. 194.
130. See Uri Litvak, Comment, Regional Integration and the Dispute Resolution System of the
World Trade Organization After the Uruguay Round: A Proposal for the Future, 26 U. MIAMI INTERAM. L. REV. 561, 568–69 & n.28 (1995) (discussing the evolution of the GATT system, which was
developed along with the International Monetary Fund and World Bank and the development of the
WTO).
131. See id. at 569 (stating that “the GATT lacked institutional and constitutional foundations”).
132. Id.
133. Id. at 581.
134. Id. at 569 n.29.
135. See id. at 581 (noting that the WTO was created to aid in resolving disputes among
contracting parties and to enforce rules).
136. Understanding on Rules and Procedures Governing the Settlement of Disputes, Apr. 15,
1994, Annex 2, LEGAL INSTRUMENTS—RESULTS OF THE URUGUAY ROUND vol. 31, 33 I.L.M. 1226
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reviewing the WTO enforcement mechanism, it is important to understand
the WTO’s structure and its role.
C. Structure of the WTO
1. The Dormant Commerce Clause Feature
The WTO attempts to eliminate barriers to trade, and in this way, it is
similar to the dormant commerce clause of the U.S. Constitution.137 The
dormant commerce clause functions to protect “out-of-state interests from
the parochialism of in-state lawmakers, and forces state lawmakers to
consider the effect of their policies on out-of-state interests.”138 Dormant
commerce clause jurisprudence suggests “a statute that explicitly
distinguishes between products on the basis of their place of [origin] is
always considered ‘discriminatory.’”139 Additionally, when a statute or
action is facially neutral, courts nonetheless seek to determine whether the
statute or action is implicitly discriminatory.140
The WTO analogue to the dormant commerce clause flows from its
administration of the GATT of 1947.141 GATT “embodies the basic
reciprocal commitments to lower tariff barriers that lie at the heart of the
WTO system.”142
Unlike the dormant commerce clause, “GATT
constraints imposed on member governments rest on an explicit
mandate.”143 Pertinent articles of GATT include: Article I, which states the
most-favored-nation principle prohibiting discrimination based on national
origin; Article III, which puts forth the national-treatment obligation
prohibiting discrimination between domestically produced and imported
(1994) [hereinafter Dispute Settlement].
137. U.S. CONST. art. I, § 8, cl. 3; see also Driesen, supra note 27, at 360 (noting that the
Supreme Court has treated the Commerce Clause of the U.S. Constitution as “authority for judicial
constitutional oversight of state regulation and taxation potentially impeding interstate commerce” and
that “[t]he resulting ‘dormant commerce clause’ jurisprudence of the United States Supreme Court also
invokes an anti-discrimination principle to advance free trade”).
138. Gerhart, supra note 27, at 40.
139. Daniel A. Farber & Robert E. Hudec, Free Trade and the Regulatory State: A GATT’s-Eye
View of the Dormant Commerce Clause, 47 VAND. L. REV. 1401, 1416 (1994).
140. See id. at 1416–17 (describing courts’ use of five factors to determine discrimination:
discriminatory intent; proxy characteristics; embargo; competitive advantage; and uniformity and
consistency).
141. See Alan O. Sykes, The Least Restrictive Means, 70 U. CHI. L. REV. 403, 405 (2003)
(pointing out that the GATT “was subsumed within the new WTO system in 1995”); see also supra note
1 (showing that the GATT is annexed to the WTO agreement).
142. Sykes, supra note 141, at 405.
143. Farber & Hudec, supra note 139, at 1418. “GATT is a formal international agreement
containing specific prohibitions of certain kinds of protectionist trade barriers.” Id.
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goods; and Article XI, which prohibits quantitative restrictions.144 Thus,
GATT explicitly imposes restrictions where the dormant commerce clause
implicitly imposes them, but the effect is similar.145
GATT has an exception to this dormant commerce clause feature—
Article XX.146 Article XX “authorizes exceptions whenever trade barriers
are found to be required by other widely-accepted government regulatory
objectives such as health, safety, or law-enforcement.”147 This exception
was once thought to be the vehicle through which member states might
protect the environment and laborers; however, this has not been the case—
free trade principles have trumped well-intentioned regulations.148
2. The WTO’s Role
It is crucial to note that the WTO was not established as a world
governing body, but rather as a free trade facilitator.149 Despite this, some
commentators have urged that the WTO is, in fact, more than simply a free
144. GATT arts. I, III, XI, supra note 1; see also Driesen, supra note 27, at 292–95 (discussing
GATT provisions and GATT case law).
145. Farber & Hudec, supra note 139, at 1418.
146. GATT art. XX, supra note 1; Farber & Hudec, supra note 139, at 1419.
147. Farber & Hudec, supra note 137, at 1419. The application of this exception by GATT
tribunals requires analysis of “the extent to which claimed regulatory objectives are served by a
particular trade-restricting measure.” Id.
148. See generally PETER UIMONEN & JOHN WHALLEY, ENVIRONMENTAL ISSUES IN THE NEW
WORLD TRADING SYSTEM 112–17 (1997) (detailing how Article XX is not well defined relating to its
use as an exception for environmental protections, and offering proposals on how to change Article XX
to make it more of a vehicle for meaningful environmental protections); Howard F. Chang, An
Economic Analysis of Trade Measures to Protect the Global Environment, 83 GEO. L.J. 2131, 2139,
2144–45 (1995) (discussing the GATT Tuna/Dolphin decision, which held a U.S. measure to protect
dolphins during tuna fishing invalid and finding that Article XX did not apply because the measure
would only provide conservation if another country changed its policy, thus making the measure a trade
restriction); Matthew T. Mitro, Comment, Outlawing the Trade in Child Labor Products: Why the GATT
Article XX Health Exception Authorizes Unilateral Sanctions, 51 AM. U. L. REV. 1223, 1271 (2002)
(presenting a hypothetical WTO case involving U.S. measures against importation of products from
countries allowing child labor and finding that the measure should be valid); Contemporary Practice of
the United States Relating to International Law, 93 AM. J. INT’L L. 492, 494 (Sean D. Murphy ed.,
1999) (analyzing the WTO Turtle/Shrimp decision where the United States was found to have violated
GATT when it tried to protect turtles during shrimp fishing and finding that Article XX did not provide
an exception because the U.S. measure was arbitrary and unjustifiable discrimination). For the actual
decision in the Tuna/Dolphin dispute, see GATT Dispute Settlement Panel Report on United States
Restrictions on Imports of Tuna, Sept. 3, 1991, GATT B.I.S.D. (39th Supp.) (1993), 30 I.L.M. 1594
(1991). For the Shrimp decision, see WTO Appellate Body, Report of the Panel on United States—
Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/R (May 15, 1998), reprinted in
37 I.L.M 834 (1998).
149. WTO, supra note 1. The WTO is clear on its Web site that it is a body set up to deal with
trade issues. It does not assert any intention of being a world government.
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trade body.150 Other commentators, however, argue that implying that the
WTO is a world governing body would have negative consequences.151 It is
not necessary to resolve that dispute here. The advocates of a New Deal for
the WTO implicitly indicate their assumption that the WTO is or should be
functioning as a world governing body, even though the WTO has its roots
in world trade, not governance. This friction over what the actual role of
the WTO is or should be is discussed further in Part III.
D. Side Agreements
The WTO formation included the adoption of side agreements, which
were binding and applicable to the dispute settlement process.152 In fact,
the founding of the WTO included multiple side agreements creating many
new rights.153 These side agreements are even intended to prevail over
GATT provisions when they conflict.154 They are enforced by dispute
panels and carry the same force if they are violated as does GATT itself.155
It would seem that the adoption of side agreements to protect the
environment and labor would be the easiest route toward achieving a New
Deal for the WTO. For example, in creating the North American Free
Trade Agreement (NAFTA), the signatory countries adopted labor and
environmental side agreements.156
However, adopting such side
150. See, e.g., Shaffer, supra note 116, at 11–12 (arguing that the WTO is a supranational
regime, as compared to an international one, basically asserting that the WTO is more akin to a world
governing body than a world trade body).
151. See, e.g., Ernest A. Young, The Trouble with Global Constitutionalism, 38 TEX. INT’L L.J.
527, 529 (2003) (arguing that supranational lawmaking undermines the U.S. Constitution).
152. See generally Sung-joon Cho, GATT Non-Violation Issues in the WTO Framework: Are
They the Achilles’ Heel of the Dispute Settlement Process?, 39 HARV. INT’L L.J. 311, 313–14 (1998)
(discussing the adoption of side agreements and advocating for their use in dispute panel decisions).
Side agreements in international treaties are agreements outside of the text of the main agreement, which
may or may not be binding, depending on the body adjudicating them. There is more discussion
following in this Part about how side agreements are dealt with in the WTO.
153. See Robert E. Hudec, The New WTO Dispute Settlement Procedure: An Overview of the
First Three Years, 8 MINN. J. GLOBAL TRADE 1, 17 (1999) (discussing new legal rights created in the
WTO at the end of the Uruguay Round of 1994 for trade in goods and two new legal areas covered
including intellectual property (TRIPS) and trade in services (GATS)).
154. Cho, supra note 152, at 338 n.146.
155. See WTO Appellate Body, Report on EC Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/AB/R, WT/DS48/AB/R (Jan. 16, 1998) (adjudicating a WTO dispute and
finding a violation of the Agreement on the Application of Sanitary and Phytosanitary
Measures), available at http://www.worldtradelaw.net/reports/wtoab/ec-hormones(ab).pdf.
156. See generally Jack I. Garvey, Trade Law and Quality of Life—Dispute Resolution Under
the NAFTA Side Accords on Labor and the Environment, 89 AM. J. INT’L L. 439, 439 (1995)
(discussing labor and environmental side agreements and the dispute resolution process adopted by
NAFTA); Chantell Taylor, NAFTA, GATT, and the Current Free Trade System: A Dangerous Double
Standard for Workers’ Rights, 28 DENV. J. INT’L L. & POL’Y 401, 405–07 (2000) (noting the role that
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agreements is difficult within the WTO structure.157 In the WTO, all
members must accept side agreements and are bound by them, whereas the
GATT side agreements were optional.158 Within this context, the analogue
of the Trade-Related Aspects of Intellectual Property Rights (TRIPS)
dealing with Intellectual Property (IP) becomes relevant, because it
demonstrates a successful side agreement adopted within the WTO
structure.159
1. TRIPS Analogue: The Structure of TRIPS, and Why It Was Necessary
TRIPS “comprises seventy-three articles on a broad range of
subjects.”160 TRIPS’s main “objective is to ‘contribute to the promotion of
technological innovation and to the transfer and dissemination of
technology, to the mutual advantage of producers and users of technological
knowledge and in a manner conducive to social and economic welfare, and
to a balance of rights and obligations.’”161 TRIPS was necessary because of
“the prevalent perception that inadequate global standards for the protection
of IP rights, coupled with ineffective enforcement, prejudiced the legitimate
commercial interests of states.”162 It has been strongly suggested that
business leaders played in seeking side agreements, as well as the passage of NAFTA). The issues of
side agreements, trade, and NAFTA were central to the Democratic Presidential primary, with two of the
leading candidates, Senator John Edwards of North Carolina (the eventual Democratic Vice-Presidential
nominee) and Senator John Kerry of Massachusetts (the eventual Democratic Presidential nominee),
sparring over trade issues. Senator Edwards said that if elected, he would sign only trade agreements
with environmental and labor protections in the text of the agreement, as he argued that side agreements
were not often enforced. John F. Harris & Jim VandeHei, AFL-CIO Backing Gives Kerry a Boost,
WASH. POST, Feb. 20, 2004, at A12. Although this is possibly true for NAFTA, it would not be true for
the WTO, as WTO side agreements are enforceable. It is unclear what, if any, difference there would be
in terms of enforcement if protections were included in the text of a WTO agreement, as opposed to a
side agreement. Edwards was a fierce critic of NAFTA on the campaign trail, noting his disapproval of
it and other trade agreements specifically in relation to the loss of American jobs. Id. Kerry, who voted
for NAFTA (Edwards was not in the Senate in 1993) but denounced President Bush’s enforcement
record on labor and environmental issues related to trade, said he would not sign a trade agreement as
President that did not protect the environment and labor. Id.
157. See Hilary K. Josephs, Upstairs, Trade Law; Downstairs, Labor Law, 33 GEO. WASH.
INT’L L. REV. 849, 850 (2001) (noting that the adoption of a side agreement on labor would be difficult,
as would amending the WTO).
158. See Suzanne Pyatt, The WTO Sea Turtle Decision, 26 ECOLOGY L.Q. 815, 818 (1999)
(discussing the WTO environmental decisions and side agreements).
159. Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, WTO
Agreement supra note 1, Annex 1C, LEGAL INSTRUMENTS—RESULTS OF THE URUGUAY ROUND vol.
31, 33 I.L.M. 81 (1994) [hereinafter TRIPS].
160. David Nimmer, GATT’s Entertainment: Before and NAFTA, 15 LOY. L.A. ENT. L.J. 133,
141–42 (1995).
161. Id. at 142 (quoting TRIPS art. 7).
162. Note, Tackling Global Software Piracy Under TRIPS: Insights from International
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developing countries were the true target of TRIPS, due to their lax
enforcement standards on intellectual property issues.163
Although there were two previous conventions on intellectual
property—the 1883 Paris Convention and the 1886 Berne Convention—
neither established “binding, universal minimum standards.”164 The world
needed a modern agreement. TRIPS “creates international minimum
standards for the protection of various forms of IP—including copyrights
and related rights, trademarks, industrial designs, patents, lay-out designs of
integrated circuits, and undisclosed information.”165 TRIPS also includes
obligations concerning substantive issues, such as software piracy.166
TRIPS does not prevent member states from establishing higher standards
than their domestic laws provide, but it does require that states provide at
least the same standard for foreign nationals as they do for their own
citizens.167 This provision of TRIPS is subject to preexisting treaties, and
the standards incorporated into TRIPS apply only to obligations of TRIPS,
not to other treaties.168 Most importantly for purposes of considering the
adoption of side agreements concerning labor and the environment, TRIPS
forces member states to adopt positive obligations that raise standards,
instead of the traditional negative obligations that lower trade barriers
imposed by GATT through its dormant commerce clause feature.169 GATT
traditionally had not enforced positive obligations on its members; it had
provided only mechanisms to restrict laws which restrain trade—thus the
positive obligations in TRIPS are the closest that the WTO comes to
legislating akin to a governing body.170
Relations Theory, 116 HARV. L. REV. 1139, 1141 (2003) [hereinafter Global Software Piracy].
163. Charles S. Levy, Implementing TRIPS—A Test of Political Will, 31 LAW & POL’Y INT’L
BUS. 789, 789 (2000). Levy argues that “TRIPS only shores up” the laws and protections provided by
developed nations and is not substantially aimed at helping developed nations protect intellectual
property. Id.
164. Global Software Piracy, supra note 162, at 1141–42.
165. Id. at 1142.
166. Id.
167. Nimmer, supra note 160, at 144–45.
168. Id. at 145.
169. See Levy, supra note 163, at 789 (noting that TRIPS was the first agreement to impose the
adoption of positive obligations on member states).
170. See DiMatteo et al., supra note 119, at 97–98 (discussing how new WTO agreements, such
as TRIPS, impose a positive obligation on member nations which traditionally was the domain of
domestic legislation).
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2. TRIPS Enforcement
As part of the WTO, TRIPS enforcement comes through the dispute
settlement process.171 When a member state challenges another member
state with violating a TRIPS provision, or any WTO provision for that
matter, a WTO dispute-settlement panel convenes.172 The Dispute
Settlement Body convenes a panel unless it decides not to by written
consensus.173 The panel of three or five independent members with relevant
experience receives evidence from the parties and interested third-party
member states.174 The panel also can “seek information and advice from
‘any individual or body which [it] deems appropriate.’”175 The panel then
decides the matter and issues written findings.176 Appeals are taken to the
Appellate Body, which decides only legal issues.177 The Appellate Body
decision is the final decision, unless the Dispute Settlement Body, which
could effectively veto the decision, decides otherwise after the report has
been seen by all WTO member states.178
III. COMPARING APPLES AND ORANGES?
A. Limitations of the Comparison
Before comparing the circumstances of today to those surrounding the
New Deal, and before trying to ascertain whether the New Deal and its
provisions provide a proper analogue for the WTO, it is imperative that the
limitations of such a comparison be discussed. In an article dissecting the
Progressive Era for details as to how it might serve as an analogue for the
current era and the WTO, Theodore Posner and Timothy Reif discuss some
171. It should be noted that at present, WTO dispute settlement panels and WTO Appellate
Body proceedings are closed to the public. This has been a source of some controversy, as many
interested third parties, and even member nations not a party to the dispute at hand, are not allowed to
view the proceedings. One former WTO Appellate Body member—a judge who sits for dispute
settlements—has recently advocated opening up the proceedings (although obviously not the trade
negotiations or the judicial deliberations) that occur during dispute settlement in the WTO. James
Bacchus, Editorial, Open up the WTO, WASH. POST, Feb. 20, 2004, at A25. This might provide some of
the transparency that critics have charged is lacking in the WTO.
172. Global Software Piracy, supra note 162, at 1144.
173. Id.
174. Id.
175. Id. (alteration in original) (quoting Understanding on Rules and Procedures Governing the
Settlement of Disputes, Apr. 15, 1994, WTO Agreement supra note 1, Annex 2, LEGAL
INSTRUMENTS—RESULTS OF THE URUGUAY ROUND vol. 31, 33 I.L.M. 1226 (1994).
176. Id.
177. Id.
178. Id.
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limitations of such an analysis.179 The main limitation is the inadequacy of
the comparison between the WTO and the U.S. government. Specifically,
Posner and Reif note areas where the WTO and the United States differ.
One difference is that the WTO is more limited in scope because it has no
legislature, and no Commerce Clause grant of authority to create positive
legislation.180 Also included is the fact that the WTO has a diverse group of
140 member states and can make affirmative agreements only through
consensus among all of them; that the WTO is new and evolving while
building legitimacy; and that the WTO must compete with other
multilateral and bilateral trade agreements such as NAFTA, where nations
can adopt agreements on issues without being subject to 140 nations’
demands.181
In addition to the obvious differences between the WTO and the United
States, including the fact that the United States is a democracy whereas the
WTO has member nations with a variety of political systems, it is also
important to note that the circumstances surrounding enactment of the New
Deal were unique. These circumstances are not precisely replicated in the
current international environment, or in the current U.S. political
environment for that matter. The Great Depression, despite its horror,
presented an opportunity. The situation today has that same potential for
the world community to use a crisis situation as an opportunity to attack
many vexing issues. All limitations considered, there are valid comparisons
to be made.
B. The Circumstances of the Great Depression and Today
Professor Derber advocates for a New Deal featuring labor and
environmental protections, as well as democratic reform.182
The
circumstances surrounding the Great Depression were economic in nature,
although the response to the Depression involved social, as well as
economic, change. The circumstances of the international community
today regarding labor and the environment are both social and economic
crises. While Derber contends that the terrorist attacks of September 11th
and worldwide economic slowdown make the global climate fertile for
change, it does not necessarily follow that the response to terrorism and
economic downturn is to enact social protections such as labor and
179.
180.
181.
182.
See supra note 21.
Posner & Reif, supra note 21, at 501.
Id. at 501–03.
DERBER, supra note 3, at 147–51.
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environmental standards in the WTO.183 However, Derber argues that the
WTO has lost credibility in the developing world by not delivering
sustainable growth and democratic reform as intended and that the
alternative to a global New Deal would be “a slide into depression” that
could be a “catalyst for violence.”184 Derber notes that world leaders such
as Prime Minister Blair of Britain have at least implicitly recognized the
need for “a worldwide commitment to end global poverty as the most costeffective approach” to ending terrorism.185
Even if the aforementioned global climate did provide the impetus for
enacting portions of Derber’s global New Deal, it is necessary to consider
the current global climate as it specifically pertains to labor and the
environment when discussing the labor and environmental protections
advocated by Derber.186 During the Great Depression, there was massive
unrest in the United States.187 The situation today is not wholly dissimilar
183. See id. at 148–49 (noting the current global situation and how it makes a global New Deal
possible). While Professor Derber’s global New Deal reaches well beyond labor and environment and
extends to grassroots democracy, as well as changes in global finance, the question of whether global
circumstances today can be equated to those during the Great Depression is debatable. The question of
whether the circumstances today have laid a fertile ground from which a New Deal, including new
global environmental and labor standards, would bloom is also debatable.
184. Id. at 149.
185. Id. at 156. In the post September 11th world, there needs to be a new discussion of the
“underlying systemic conditions creating such deep hatred by the global poor against the world’s rich.”
Id. According to Derber, the relevance of adding protections such as labor and environmental standards
to the WTO can be seen through the lens of fighting terrorism. Id. Derber sees these types of
protections as strengthening the developing nations, and specifically poor nations, through sustainable
growth and employment for those nations, thus perhaps eliminating some of what he sees as the
underlying causes of terrorism and violence—namely poverty, hopelessness, lack of democracy, and
lack of human rights. Id. It is important to note that much is required beyond labor and environmental
protections, and much is required in other international institutions beyond the WTO. Id. at 148. Derber
asserts that some leaders, including Prime Minister Blair and Britain’s Chancellor of the Exchequer
Gordon Brown, have discussed the need for more foreign aid and debt relief to fully address the crisis
situation in developing nations. Id. at 156.
Some scholars see trade as a limited vehicle for reform in the human rights area because
wealthy nations, most of which already have some human rights protections, are unlikely to use trade as
an incentive to raise human rights standards against each other. Stephen Livingstone, Economic
Strategies for the Enforcement of Human Rights, in A HUMAN RIGHTS: AN AGENDA FOR THE 21ST
CENTURY 181, 191–93 (Angela Hegarty & Siobhan Leonard eds., 1999). Where they do condition trade
or foreign aid on human rights improvements, they often are partial to some nations over others, and do
not adequately use debt relief as an incentive. Id.
Other scholars believe the WTO is doing a good job in attempting to deal with human
rights issues given that its primary mission is trade. For a view of what the WTO has accomplished with
human rights and how it might do more in this area in the future, see Stephen J. Powell, The Place of
Human Rights Law in World Trade Organization Rules, 16 FLA. J. INT’L L. 219 (2004).
186. See DERBER, supra note 3, at 154, 159–60 (detailing other policy positions that might be
considered more pertinent to dealing with the global issues of terrorism and recession).
187. See MCELVAINE, supra note 43, at 91 (considering the reactions of various labor groups
and congressmen to the Great Depression). No doubt contributing to the unrest was a prevailing feeling
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with regard to anti-globalization protests of the WTO, citing the poverty
and hopelessness of many underdeveloped nations acting as a cause of
unrest.188 Derber argues that there is great unrest in the developing nations,
and he further notes that much of the world lives in conditions that are
much worse than the United States faced in the 1930s.189
During the Great Depression, unrest stemmed both from the economic
conditions and the lack of effective governmental action to combat them.190
Today’s situation, globally speaking, is similar because WTO critics are
concerned about environmental, labor, and other conditions, as well as the
lack of effective redress through the WTO.191 Thus, the crisis situation
during the Great Depression might have been far worse than the situation
today in America. However, in some ways, such as unemployment, as well
as the previously discussed environmental and labor exploitation due to the
race to the bottom, the situation today with respect to developing nations is
worse than the American experience during the Great Depression.192 This
among business leaders that the unemployed had no one to blame but themselves. This insensitivity to
the harsh economic conditions during the Great Depression may be in some ways mirrored today by
those who feel that it is a natural thing for low-wage workers to be out of work, as their jobs are shipped
overseas. For a business leader’s view on unemployment during the Great Depression, see
LEUCHTENBURG, supra note 46, at 21. For views today on unemployment due to economic conditions,
some due to trade, see supra note 120.
188. See, e.g., McGinnis & Movsesian, supra note 122, at 512–13 (noting the Seattle protestors’
demands for environmental, labor, and other protections); Kevin Sullivan, Protestors Defend Cause at
Trade Talks; Activists at WTO Forum Say Isolated Violence Detracts from Their Message, WASH. POST,
Sept. 12, 2003, at A20 (discussing the violent protests at Seattle and the fact that many states regard the
protestors as a security threat).
189. DERBER, supra note 3, at 156.
190. See MCELVAINE, supra note 43, at 73–94 (detailing the specific effects of the Great
Depression on the U.S. economy and the actions taken by the government).
191. See CLINTON, supra note 123, at 879–80 (giving former President Bill Clinton’s views on
the Seattle protests). Former President Bill Clinton discusses the WTO protests in his memoir, stating
that many of the protestors in Seattle had “legitimate grievances” and that
the WTO would have to be more open, and more sensitive to trade and
environmental issues, and the wealthy countries that benefited from globalization
would have to do more to bring its benefits to the other half of the world that was
still living on less than two dollars a day.
Id. Clinton “was convinced” that protests would continue until the world “addressed the concerns of
those who felt left out and left behind.” Id. at 880. Clinton implies that the protestors speak not only for
themselves, but also for the people in underdeveloped nations who do not have a voice in the debate, in
many instances because they live in countries that are not democratic. See generally Carolyn Said,
Protestors Prepare to Decry Globalization, S.F. CHRON., Sept. 5, 2003, at B1 (interviewing various
protestors who were upset with the WTO and the fact that it is not responsive to their protests and the
global conditions that prompted the protests).
192. See LEUCHTENBURG, supra note 46, at 26 (discussing the mood during the Great
Depression). Leuchtenburg disagrees with the ubiquitous sentiment that Roosevelt saved the nation
from revolution. Id. He does, however, have an interesting observation about the mood during the
Great Depression, noting that the nation “was less rebellious than drifting, although there were clearly
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comparison is not irrelevant. There does exist, at least in the eyes of some,
a global crisis situation today.
The situation is highly relevant when looking at the major issue during
the Great Depression, which was the lack of governmental tools available to
combat it—or the lack of will by those politicians in power to use the tools
they had.193 Similarly, the WTO today either does not have the positive
grants of authority necessary to remedy the concerns of the protestors and
developing nations, or the member states refuse to reach a consensus on
how to deal with the issues.194 It should be noted that the Great Depression
limits to how long it would be willing to drift.” Id. The disillusionment that Leuchtenburg attributes to
the nation during the Great Depression well could apply to the views of people in underdeveloped
nations struggling with poverty. Consider, as well, that unemployment in the world’s developing
nations is staggeringly high. According to the International Labour Organization, unemployment for
2003 in Sub-Saharan Africa was 10.9%, the Middle East and North Africa 12.2%, and the Caribbean
and Latin American region 8.0%. INT’L LABOUR OFFICE, GLOBAL EMPLOYMENT TRENDS 2 (Jan.
2004), available at http://www.ilo.org/public/english/employment/strat/download/trends.pdf. Compare
those numbers to a worldwide average of approximately 6%. Id. More striking are some anecdotal
examples of developing nations’ unemployment rates. According to the United Nations, Algeria had a
27.3% unemployment rate for 2001, Argentina a 15.6% rate for 2003, South Africa an extremely high
29.7% rate for 2003, Slovakia a 17.5% rate for 2003, Poland a 19.6% rate for 2003, and both the
Dominican Republic and Venezuela had rates near 16% for 2001 and 2002 respectively. Statistics Div.,
United Nations, Indicators on Unemployment (Jan. 2005), at http://unstats.un.org/unsd/demographic/pro
ducts/socind/unempl.htm. Adding to the unemployment plague in developing nations is the very limited
availability of unemployment assistance or insurance. Id. These nations also have high incidences of
working poverty, where workers are employed, but do not make anything resembling a living wage.
INT’L LABOUR OFFICE, supra, at 11. Women and youths have rates much higher than the national
averages in many of these nations. For instance, youths have a rate of 25.6% unemployment in the
Middle East/North African region. Id. at 4.
193. See supra Part I.A and notes 58–59.
194. See supra Parts II.B, II.C, II.D; see also MYRDAL, supra note 18, at 292–95 (listing the
issues facing developing nations at the start of the 1970s). Myrdal’s analysis drives home the point that
trade is the central issue in combating poverty around the world. While it may not be apparent at first
impression that the WTO should be the body to attack world poverty and promote better standards for
labor and the environment, Myrdal discusses how “developed countries are now developed” because
“they have interfered in the play of the market forces and framed policies that counteracted and
corrected the adverse effects of those forces.” Id. at 294. This demonstrates how trade plays such a
crucial role in helping or hindering developing nations as they attempt to work their way out of poverty.
Myrdal’s analysis also attempts to remove the illusion that completely unregulated market forces have
contributed to developed nations’ wealth. While unregulated market forces may help sustain wealth
already in place, Myrdal contends that unregulated market forces hinder developing nations’ efforts to
grow economically. Id. at 279. Myrdal further contends that developed nations did not grow by
adhering to unregulated market dogma, but rather by strategically using interference in markets to
bolster their growth. Id. Thus the WTO, as the world’s trade-facilitating body, has a unique
responsibility to developing nations that might not be met merely by eliminating trade barriers, but may
require some positive action, such as implementing labor, environmental, and human rights standards to
help level the playing field instead of maintaining and encouraging the status quo as the current system
does.
It is not just the WTO that has a responsibility to developing nations. Developed nations
and international institutions must also respond to global poverty. Jeffrey Sachs advocates for five
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had headline-grabbing, cataclysmic events such as the stock market crash to
heighten the crisis situation, while the current global situation relating to the
environment and labor has not had a similar attention-grabbing event.
Instead, there has been a procession of smaller, but not necessarily less
tragic, events.195
C. Would a New Deal Equal Labor and Environmental Protection for the
WTO?
Having determined that the world today faces economic, social, and
environmental situations that, at least in underdeveloped nations, have
reached crisis levels similar to the domestic situation in the United States
during the Great Depression, the relevant issue is whether the New Deal
program as it existed provides a useful analogue for today’s WTO. As
major interventions that would aid developing nations and small villages within those nations:
improving health; educational investment; electricity; providing clean water and sanitation; and smarter
agricultural practices. Jeffrey D. Sachs, The End of Poverty, TIME, Mar. 14, 2005, at 42, 50–51. He
criticizes the United States for not reaching the goal of providing 0.7% of national income to help poor
nations, and he criticizes the IMF and World Bank for acting more as collection agencies than as
innovative institutions. Id. at 54.
195. See, e.g., Guy De Jonquieres, Call for Trade Rule Overhaul to Favour Poor Nations, FIN.
TIMES, June 21, 2004, at 8 (reporting on a group of economists who said that poor countries are at a
disadvantage due to WTO procedures and that trade agreements have damaged developing countries’
economies and raised their unemployment rates); Daniel Elkan, Fired with Ambition, THE GUARDIAN
(United Kingdom), Apr. 21, 2004, at 12 (discussing the “slash and burn” farming that has caused
massive rainforest destruction and species loss because of the need for poor farmers to cut new patches
of forest every year or two to provide for themselves, and offering an alternative model of farming in the
hopes that these poor farmers will be able to farm the same land repeatedly and avoid the need to
destroy more rainforests); Tony Freemantle, The Nation: A Look Back, HOUS. CHRON., Dec. 31, 1989, at
12 (detailing the Exxon Valdez oil tanker disaster where a supertanker spilled eleven million gallons of
crude oil into unspoiled wilderness in Prince William Sound off of Alaska, killing thousands of species
of birds and other animals and costing huge sums of money to attempt to clean up); Derrick Z. Jackson,
Bush Fries Climate Change, BOSTON GLOBE, June 20, 2003, at A15 (citing a report commissioned by
President Bush that noted greenhouse gases were accumulating in the atmosphere and that global
warming may cause serious issues regarding coastlines and spread of disease); Christopher Snowbeck,
Pain from Poison Gas Leak Still Haunts Them, Bhopal Survivors Say, PITTSBURGH POST-GAZETTE,
May 26, 2003, at A11 (discussing the tragedy at Bhopal, India—an example of a global multinational
corporation (Dow Chemical) located in a poorer country—where the Union Carbide plant leaked poison
gas killing over 14,000 people overall and 4000 within a few hours of the leak); Joseph E. Stiglitz, Why
We Should Worry About Outsourcing, MIAMI HERALD, May 9, 2004, at 1L (commenting on the labor
outsourcing crisis that has gripped the United States and offering the advice that government will have
to manage globalization to ensure that the benefits are available to all and not just a select few); Fred O.
Williams, ‘Season of Conscience’: Anti-Sweatshop Movement Finding Fertile Ground Here, BUFF.
NEWS, Dec. 15, 2002, at B7 (reporting an anti-sweatshop movement to make consumers aware of the
sweatshop labor used in countries abroad where jobs have been relocated from the United States, and
discussing various labor issues including child labor and corporate standards relating to living wage and
the right to organize for workers abroad). These are just a few examples of the types of events that,
when woven together, create the crisis situation regarding global environmental and labor issues.
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already discussed, the New Deal provided various forms of economic,
social, and labor protections.196 The aims of the New Deal were not to start
a revolution, but to save the democratic capitalist system from its own
excesses.197 Similarly, when discussing a New Deal for the WTO, it must
be within the context of the WTO as a free trade body, albeit a body that
may need to be saved from its own rigidity in favoring trade over member
states’ environmental and labor protections.198
Professor Derber’s New Deal theory is essentially that the absence of
regulation is a subsidy for business, which business uses to exploit the
public.199 Among other ideas, he proposes adoption of labor and
environmental standards as a means of accomplishing a New Deal. The
issue is whether his proposal is a proper historical analogue for the WTO.
The answer is a qualified yes. While Derber and many other advocates
see a global New Deal as requiring more regulation in order to avoid
subsidizing business, and to protect labor and the environment, this is only
partially the case. It is clear that the historic New Deal intended to
revitalize the economy, stimulate the private sector, and provide social
protections. As far as the advocacy of a New Deal for the WTO is in the
context of making the WTO a more efficient facilitator of economic growth
through the enactment of innovative social protections, the historical
analogue is on the mark.
As far as the advocacy of a New Deal for the WTO is in the context of
turning the WTO into a world government, something it is not, the
historical analogue falls short. The reason is that the New Deal, for all of
its myriad provisions, did not attempt to change the system of governance
in the United States, only to tweak it. Likewise, the New Deal for the WTO
would be an historical successor to the original only if it, too, intended to
work within the system in place, not as a revolution against that system. In
196. See supra Part I.
197. Id.
198. See supra note 149 and accompanying text; see also CLINTON, supra note 123, at 894
(expressing former President Clinton’s views on free trade). Clinton states quite succinctly that the issue
regarding the WTO and the global economy, as related to environmental and labor protections, is
“whether we could have a global economy without global social and environmental policies and more
open governance by the economic decision makers, especially the WTO.” Id. Clinton stakes out a
position that he terms a third way, agreeing neither with the contention that trade did nothing to lift
people out of poverty and nations out of isolation, nor with the contention that unregulated trade was all
that was necessary to solve global economic and social issues. Id. Instead, he seems to agree with the
balanced principles of the historic New Deal, offering the need for trade, as well as “a concerted effort”
to provide “nations the tools and conditions to make the most of it.” Id.
199. See DERBER, supra note 3, at 148 (stating that “a practical program of global reconstruction
[is] essential to turn globalization into an attack on global poverty rather than a feeding frenzy for the
rich”).
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other words, any reform advocating the abolition of the WTO, or the
transformation of the WTO from a body mainly concerned with trade to a
body mainly concerned with governance, would be a reform which does not
pay heed to the historical New Deal’s aims and implementation.
A useful means of illustrating the New Deal philosophy is to look to
the New Deal’s programs. As Professor Ramirez found, “[t]he real legacy
of the New Deal’s regulatory initiatives lies in innovations designed not to
quell but to facilitate market action.”200 The New Deal’s legislation, and
the rationales for passing the legislation, bear out his assertion. For
example, the AAA was implemented on a voluntary basis to stimulate the
prices for farm goods.201 The New Deal pushed public works and
environmental conservation as a means of getting the economy moving,
with the social and environmental benefits being ancillary to the underlying
goal of stimulating the economy.202 The New Deal financial reform acts
intended to require adequate corporate disclosure so investors could invest
without fear and were intended to consolidate monetary policy in the
federal government.203 The Social Security Act, a landmark piece of social
legislation, attempted not to remove subsidy from business, but to create
public subsidy and stimulation of business by providing public money for
aging workers and others in need.204 The NLRA, also a significant reform,
tried not merely to protect workers rights, but also to create a consumer
class to stimulate the economy.205 Additionally, the vision of the Third
New Deal period, which did not fully come to pass, was to provide new
economic rights and new government initiatives, all aimed at creating full
employment with the private sector playing the vital role.206 Thus, from
examining these examples of New Deal programs, it becomes clear that the
New Deal was primarily economically motivated and secondarily socially
motivated.
Within that context, one must examine how a proper New Deal
analogue would be implemented in the WTO. The means most consistent
with the New Deal vision would likely be to implement side agreements to
the WTO featuring labor and environmental protections. Professor Andrew
Strauss notes a flaw in the comparative advantage theory that the WTO is
based on—that if lax environmental standards are a means of gaining
200.
201.
202.
203.
204.
205.
206.
Ramirez, supra note 31, at 535.
MCELVAINE, supra note 43, at 148–49.
See supra notes 75–85 and accompanying text.
See supra notes 86–93 and accompanying text.
See supra notes 96–98 and accompanying text.
See supra notes 99–101 and accompanying text.
See supra notes 102–09 and accompanying text.
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comparative advantage then degrading the environment is a low cost
production factor.207 He finds that the appearance of a low cost of
production is due to the fact that the producer company and consumer do
not pay the cost of pollution; instead, the people who live in the country or
area pay.208
Thus, the cost of pollution is externalized by the market; in other
words, the market does not deal with it because multinational corporations
do not have to pay for it.209 If corporations did have to deal with this cost,
the comparative advantage would disappear, and the race to the bottom
would not occur. There would be no advantage for developing countries
that have lax environmental laws—because the cost of environmental
pollution would already be internalized within the market and would
provide no benefit to a corporation seeking to do business in a given
country.210 This argument applies to labor regulations, as well. If there
were minimum enforceable standards for wages and labor conditions
internationally, there would be no incentive to relax labor regulations in
order to invite business investment in developing countries—and this would
stanch the loss of jobs in the developed countries that had higher wages and
workplace standards.211 Stated simply, if costs of doing business included
labor and environmental costs, the playing field would be more level.212
207. Strauss, supra note 122, at 793.
208. Id.
209. Id.
210. Id. at 793–94 & n.70.
211. See generally STORRS, supra note 103, at 177–205 (detailing the Third New Deal program,
the Fair Labor Standards Act). The Act, which established uniform labor minimum standards, had a
similar objective in mind, namely to stop the migration of businesses from state-to-state based on lax
state labor standards. Id. at 178. This had the effect of simultaneously raising standards for low-wage
workers and creating a more stable job market for higher-wage earners. Id. at 177; see also Dimitris
Stevis & Terry Boswell, From National Resistance to International Labour Politics, in GLOBALIZATION
AND THE POLITICS OF RESISTANCE 150, 161–64 (Barry K. Gills ed., 2000) (offering ten policy goals for
the international labor movement, including international collaboration by labor unions to achieve
common goals, which is the type of international labor union cooperation that would likely be politically
necessary to push for labor standards for the WTO).
212. See GARY P. SAMPSON, TRADE, ENVIRONMENT, AND THE WTO: THE POST-SEATTLE
AGENDA 122–25 (2000) (detailing policy solutions for the global environmental issues relating to the
WTO and specifically laying out the needs of the developing nations, over one hundred of which are
WTO members). Sampson lays out the issues facing developing nations in the WTO, such as laborstandards issues, the need for technical resource assistance, and the need to modify certain agreements to
take into account the needs of developing nations. Id. at 124–25. Sampson argues for a middle-of-theroad approach, advocating incentives for developing nations to lift their environmental and labor
standards, while relaxing some of the demands on developing nations. Id. It seems clear from his
critique that developing nations are at a disadvantage in the WTO and need assistance and incentives in
the quest to achieve a more level playing field. For more discussion of the issues facing developing
countries in the WTO and advocating for more mediation as an incremental step toward improving the
dispute settlement apparatus for developing countries, see Hansel T. Pham, Developing Countries and
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It is with this concept in mind that a New Deal for the WTO would be
most analogous to the original New Deal. Instead of changing the WTO,
side agreements could be implemented. These side agreements could
mirror the TRIPS Agreement—meaning minimum standards for labor
wages and conditions, as well as some type of polluter-pays-the-cost-ofpollution principle achieving internalization of environmental degradation
costs—and would be enforceable through the Dispute Settlement Process.
The side agreements would help to level the economic playing field and
create a more efficient trade regime.213 Although adopting such side
agreements would be difficult, their adoption would provide New Deal-type
protections. Moreover, the side agreements would be in line with the
original New Deal’s emphasis on creating favorable economic
conditions.214
By creating labor standards, the same New Deal rationale of the NLRA
would be in effect—namely, that the promulgation of such standards would
be beneficial in creating a worldwide consumer class.215 By creating a
the WTO: The Need for More Mediation in the DSU, 9 HARV. NEGOT. L. REV. 331 (2004).
The idea of leveling the economic playing field has benefits for developed nations as well,
mainly the hope that jobs would no longer hemorrhage from developed nations at the exponentially
growing rate they are currently. This idea has gained political currency not just in the presidential
election, as has been previously discussed in this Note, but also in other federal elections. For one
example of a senator discussing the need for a level international economic playing field, see Tom
Raithel, Help May Come for Small Companies, Sen. Bayh Reveals Plan for Tax Credit and Increased
Loans During Job Fair, EVANSVILLE COURIER, Aug. 23, 2003, at B6. In Raithel’s article, Senator Evan
Bayh of Indiana, up for reelection in 2004, called for a level playing field for American workers. Id.
Bayh, considered a centrist Democrat, won reelection to the Senate despite Republican gains in Indiana
and across the country. For more on Bayh’s reelection and mention of him as a future presidential
candidate, see Deborah Orin, Bush-Hating Dems Must Find New Way, N.Y. POST, Nov. 4, 2004, at 6.
213. See DiMatteo et al., supra note 119, at 105–08, 112–19, 127–29 (offering proposals to
incorporate environmental and labor concerns into the WTO regime, as well as discussing the polluterpays principle, while accounting for some of the issues raised in regards to developing nations). For
thorough consideration of the process by which environmental and labor standards could be
incorporated into the WTO, see Chantal Thomas, Should the World Trade Organization Incorporate
Labor and Environmental Standards?, 61 WASH. & LEE L. REV. 347 (2004).
214. See LEUCHTENBURG, supra note 46, at 347 (accounting for many of the previously
overlooked groups of people that received attention during the New Deal). Leuchtenburg points out that
“[t]he New Deal achieved a more just society by recognizing groups which had been largely
unrepresented—staple farmers, industrial workers, particular ethnic groups, and the new intellectualadministrative class.” Id. Leuchtenburg does note that many Americans, such as African-Americans
and sharecroppers, were not fully included in the “new equilibrium.” Id. There can be no doubt that if a
New Deal was to be put in place globally, and included raising the labor and environmental standards in
developing nations to end the race to the bottom, that this leveling of the playing field would benefit
groups of people, and even whole nations, that have been similarly left behind in today’s global world;
see also supra Part II.D.
215. See DiMatteo et al., supra note 119, at 119–42 (discussing labor issues, proposals to
remedy them within the WTO, and offering related proposals on how to benefit the consumer class
through the WTO).
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standard whereby business must internalize environmental pollution costs,
the New Deal rationale of creating effective and transparent markets would
be in effect.216 Additionally, if the member states of the WTO decided to
enact some type of subsidy or incentive for business to internalize these
costs, this would be consistent with the New Deal rationale of the Social
Security Act. The Social Security Act removed costs from the private
sector, so it would function more robustly.
CONCLUSION
While this Note did not attempt to elaborate on specific side agreement
proposals, it is clear that the adoption of environmental and labor side
agreements to the WTO is a proper historical analogue to the New Deal.
Although it remains unclear whether advocates, such as Derber, would be
satisfied with adopting side agreements, much would likely depend on what
the minimum standards would be, how they would be enforced, how much
cost internalization multinational corporations would bear, and how much
developed or developing nations would subsidize multinational
corporations. While not a perfect analogue by any means, the New Deal
provides useful lessons for the WTO. The New Deal prioritized economic
development and set out to make it in synch to the best extent possible with
social protections.
Despite the circumstances surrounding today’s
environmental and labor crises being different in many ways from the
economic crisis of the Great Depression, there are still basic similarities.
These similarities include protests and unrest, as well as hopelessness in
developing nations, making the comparison useful.
Professor Derber advocates a wide range of reforms, including
replacing the Bretton Woods institutions and creating a more democratic
global governance system. This Note examined the aspects of his proposal
that conceivably relate to the WTO, and, thus, this critique alone cannot
fully judge his proposals. He sees an unregulated global economy today as
being similar to the unregulated economy of the pre-Great Depression era,
and seeks a comprehensive global democratic reform to implement the
protections needed to civilize today’s global economy the way the New
Deal civilized the Depression-era economy. Many of his proposals attempt
to deal with the underlying stresses of poverty, lack of human rights, and
lack of democracy that plague many underdeveloped nations. The
September 11th attacks make it apparent that there is a need to combat
216. See id. at 105–108 & nn.61–63 (discussing various approaches to global environmental
issues within the WTO and how they translate various high-minded principles of corporate governance
into reality).
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terrorism not only militarily, but also through creating hope and winning
the hearts and minds of those in underdeveloped nations. Derber’s
proposals attempt to bring democracy to the global process and alleviate
suffering in underdeveloped nations. His proposals may sometimes be
unrealistic; however, even in the context of the WTO, his proposals have
relevant links to the historic New Deal.
The WTO is not a world governing body. It does, however, have a
unique capacity to act due to its enforcement mechanisms. It may well be
that the WTO is the vehicle through which social reforms are enacted. If
this is the case, the lessons of the New Deal have validity for those seeking
to make the WTO live up to its promise as a vehicle for reform and for
those seeking to hold the WTO to its stated mission of free trade.
The New Deal was a series of programs meant to stimulate the
economy and also to provide social protections. To claim that the New
Deal was purely an economic program, or purely a social program, would
deny its inherent complexities. Indeed, it may be a common misconception
that the New Deal was focused on creating social protections and building a
welfare state. The facts do not bear out this assertion, as the New Deal was
equal parts economic and social in its goals.217
In some sense, the social protections and economic stimulation the
New Deal sought to bring about were tied together in achieving New Deal
goals. For example, the NLRA was a landmark law that protected workers’
rights and raised worker wages. This was the social protection aspect of the
law. However the law’s other purpose, and one it succeeded in achieving,
was to create a consumer class among the now-better-paid workers to
stimulate the economy.218 Without creating the social protection, there
would have been no economic stimulation, and without the underlying goal
of stimulating the economy, there might not have been the political desire to
pass the NLRA and achieve its social protections for labor. Perhaps here is
the ultimate lesson of the New Deal: it is possible and desirable to achieve
economic goals while simultaneously providing enhanced social protection
because the two may often go hand-in-hand.
217. See LEUCHTENBURG, supra note 46, at 338 (detailing that instead of enacting New Deal
reforms to achieve “sentimental” social justice, New Dealers were justifying their reforms because they
were necessary to “stabilize the economy”). The New Dealers sought to bring more Americans into the
middle class for the simple reason that “‘unless the national income was pretty widely diffused there
were not enough customers to keep the plants going.’” Id. (quoting A.A. Berle, Jr., The Social
Economics of the New Deal, N.Y. TIMES MAG., Oct. 29, 1933, at 4–5). There are certainly economic
arguments for implementing labor and environmental standards today, as has been discussed in this
Note, and these economic arguments may in the end be more persuasive to the WTO member nations
because the WTO is a body primarily concerned with economic matters.
218. See supra note 100 and accompanying text.
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For present day purposes, it is clear that something should be done to
level the playing field between developed and developing nations, as well
as to stop the race to the bottom through meaningful enactment of labor and
environmental side agreements. Despite the aforementioned limitations of
the comparison between the WTO and the New Deal, if working
environmental and labor protections are to be implemented in the WTO,
nations would do well to heed the lessons of the New Deal. Labor and
environmental side agreements to the WTO do not have to be accomplished
through a hostile and frontal attack on the WTO’s stated purpose of free
trade. Rather, the lesson of the New Deal is that these side agreements
could provide enhanced and desirable social protections, while furthering
the ultimate goal of the WTO—to facilitate free trade.
Trade never would be truly free if multinational corporations were able
to avoid paying the costs of environmental pollution by forcing a regulatory
race to the bottom, which harms both developed and developing nations.
Trade never would be truly free if these same corporations were able to
exploit cheap labor in developing nations to encourage a race to the bottom
for labor standards. Developed and developing nations lose out in this
situation. Environmental and labor side agreements could provide a more
truly free market where the actual costs of environmental degradation are
recognized. A labor side agreement would recognize the value of labor and
would not trivialize labor concerns by encouraging countries to compete
with each other for the lowest possible standards in order to attract business.
Through labor and environmental side agreements, the WTO could further
its goal of creating a freer market and simultaneously provide much needed
social protections. This would be in line with the New Deal ideology of
combining worthwhile social protections with economic goals to create
innovative solutions to seemingly intractable issues.219
The lessons of the New Deal clearly remain relevant even in today’s
evolving global world. These lessons include: cooperation with business
interests when possible; transparency; social protections that concomitantly
further economic interests; flexibility in the role of the regulating body or
government; compassion for the needs of individuals; and innovation in the
creation of new programs. For the WTO to fulfill the role of champion of
219. See LEUCHTENBURG, supra note 46, at 332–33 (noting that “the New Deal assumed the
responsibility for guaranteeing every American a minimum standard of subsistence” as a “matter . . . of
right” while protecting “workers and their families from exploitation” and ensuring the “industrial
system [was] more humane”). While the WTO should not be responsible as a trade body for ensuring
standards of subsistence, as that is the role of individual nation’s governments, the WTO can ensure that
the current world trade system is more humane and can protect workers and their families, as well as the
environment, from exploitation through the enactment of labor and environmental side agreements.
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social protection desired by advocates, and the role of free trade facilitator
desired by free trade adherents, it would do well to follow the historical
analogue of the New Deal.220
Darren M. Springer
220. See id. at 333 (outlinging President Roosevelt’s acceptance speech in June 1936).
Roosevelt, in advice that the WTO—though not a world government, but still an important world
body—might do well to heed, stated that it was preferable to have “the occasional faults of a
Government that lives in a spirit of charity than the constant omission of a Government frozen in the ice
of its own indifference.” Id.